Document:

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT 
 BY AND AMONG

CHYRON 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

 

Exhibit
A-1 - Form of Assignment and Assumption Agreement

Exhibit
A-2 - Form of Bill of Sale

Exhibit
A-3 - Form of Trademark Assignment

Exhibit
B - Promissory Note

Exhibit
C - Historical Financial Statements

Exhibit
D - Buyer's Opinion 

Exhibit
E - Seller's Opinion

Exhibit
F-1 - Form of PFI Consulting Agreement

Exhibit
F-2 - Form of CII Consulting Agreement

Exhibit
F-3 - Form of Williams Consulting Agreement

Exhibit
G - Form of Non-Competition and Non-Solicitation Agreement

Exhibit
H - Form of Pyburn Stock Option Grant Certificate

Exhibit
H - Form of Employment Agreement

Exhibit
I - Form of Stock Certificate

Schedule
1.1 - List of Acquired Assets

Schedule
3.3 - Consents

Schedule
3.10 - Taxes

Schedule 3.12(c) - Intellectual Property

Schedule
3.12(d) - Generally Available Commercial Software Used by Seller

Schedule 3.14(a) - Material Contracts

Schedule
3.21 - Customers

Schedule
3.22 - Standard Terms; Conditions of Sale

iii

ASSET PURCHASE
AGREEMENT

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

 

WHEREAS, Seller
is engaged in the business of developing, marketing and selling a web-based
technology that allows users to build, composite, and animate broadcast quality
graphics entirely online (the "Seller
Business");

 

WHEREAS, PFI is
Seller's managing member and owner of a majority of the outstanding membership
interests of Seller; and

 

WHEREAS, Buyer
desires to purchase, acquire, and assume, and the Seller desires to sell,
dispose of, and transfer, substantially all of the assets and certain of the
liabilities of the Seller.

 

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

ARTICLE 1

DEFINITIONS

 

Section
1.1 Defined Terms

.  As used in this
Agreement, 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 Seller
as 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, including
court costs and reasonable attorneys' fees and expenses.

"Affiliate"
has the meaning set forth in Rule 12b-2 of the regulations promulgated under
the 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 Assumption
Agreement, 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 or
asbestos-containing materials in any product or item designed, manufactured,
sold, marketed, installed, stored, transported, handled, or distributed at any
time, or otherwise based on the presence or alleged presence of asbestos or
asbestos-containing materials at any property or facility or in any structure,
including without limitation, any Liabilities arising from, relating to or
based on any personal or bodily injury or illness.

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

"Assignment and
Assumption Agreement" means the assignment and assumption agreement, dated
as 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 supplier
agreements referred to in the definition of Acquired Assets; and

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

provided,
however, that, notwithstanding the above, the Assumed Liabilities
shall not include:

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

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

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

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

2

 

"Basket" has
the 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 and
Buyer, in the form of Exhibit A-2. 

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

"Buyer" has
the meaning set forth in the Preamble hereof.

"Cap" has the
meaning set forth in Section 10.2(b) hereof.

"Cash" means
cash and cash equivalents (including marketable securities and short-term
investments) calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.

"CERCLA" has
the meaning set forth in Section 3.19(d) hereof.

 

"CII Consulting
Agreement", 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" has
the 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" means
the Internal Revenue Code of 1986, as amended. 

"Confidential
Information" means any and all information (oral or written) relating to
the Seller, the Seller Business and/or Buyer and its Affiliates or any of their
operations or activities, including, but not limited to, the terms of this
Agreement, information relating to trade secrets, plans, promotion and pricing
techniques, procurement and sales activities and procedures, proprietary
information, business methods and strategies (including acquisition
strategies), software, software codes, advertising, sales, marketing and other
materials, customers and supplier lists, data processing reports, customer
sales analyses, invoice, price lists or information, and information pertaining
to any lawsuits or governmental investigation, except such information that is
in the public domain (such information not being deemed to be in the public
domain merely because it is embraced by more general information that is in the
public 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

 

"Contemplated
Transactions" means the transactions contemplated by this Agreement and the
Ancillary 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)) and
any 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, by
and between Buyer and Todd Martin, and (b) the employment agreement, dated as
of the Closing Date, by and between Buyer and Abayomi Soeyju, each in the form
attached as Exhibit H.

"Environmental, Health, and
Safety Requirements" shall mean, as amended and as now and
hereafter in effect, all federal, state, local, and foreign statutes,
regulations, ordinances, and other provisions having the force or effect of
law, all judicial and administrative orders and determinations, all contractual
obligations, and all common law concerning public health and safety, worker
health 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, threatened
release, control, or cleanup of any hazardous materials, substances, or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation. 

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

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

 

"GAAP" means
United States generally accepted accounting principles as in effect from time
to time, consistently applied.

"Governmental
Authority" means any U.S. federal, state, foreign or local government or
any court, tribunal, administrative agency or commission or other governmental
or other regulatory authority, body or agency, including any self-regulatory
organization.

"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 and
whether 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 reexaminations
thereof; 

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

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

(d) all mask works and all applications, registrations, and
renewals 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 cost
information, and business and marketing plans and proposals);

(f) all computer software (including source code, executable
code, 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 whatever
form or medium).

"Knowledge of the Seller"
means, the actual knowledge of PFI and the officers, directors, and senior
management of the Seller, or which a prudent individual in a similar position
could reasonably be expected to discover in the course of conducting a reasonable
investigation of the books and records relating to the Seller Business and of
those employees of the Seller that have responsibility for the applicable
matter. 

"Law" means all
federal, state, local and foreign laws, statutes, ordinances, rules or
regulations, administrative policies or guidance documents, orders,
injunctions, decrees, determinations and judicial and administrative rulings
promulgated by any court or Governmental Authority.

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

5

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

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

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

"Most Recent Financial
Statements" has the meaning set forth in Section 3.7 hereof.

"Non-Competition and
Non-Solicitation Agreement" shall mean the agreement described in Section
8.2 hereof.

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

"Organizational
Documents" means, with respect to any Person, such Person's Certificate or
Articles of Incorporation or Formation, Certificate of Limited Partnership, or
other formation or charter document, and (b) its By-laws, or limited liability
company, operating, or partnership agreement, in each case with all amendments
thereto. 

"Party" has
the meaning set forth in the Preamble hereof.

"Permits" means
any governmental permits, approvals, licenses, certificates, franchises,
authorizations, consents and orders necessary for the operation of the Seller
Business in the manner that it is presently conducted that are unique to the
industry 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, an
unincorporated organization, any other business entity, or a governmental
entity (or any department, agency, or political subdivision thereof).

PFI Consulting
Agreement, means the consulting agreement, dated as of the Closing Date, by
and 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 between
Buyer and Randy Pyburn, in the form of Exhibit
G.

6

 "Restricted Period" has the meaning set
forth 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" has
the 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" has
the 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 a
corporation, a majority of the total voting power of shares of capital stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a limited
liability Seller, partnership, association, or other business entity (other
than a corporation), a majority of the partnership or other similar ownership
interests thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more Subsidiaries of that Person or a combination
thereof (for purposes of this clause (b), a Person or Persons own a majority
ownership interest in such a business entity if such Person or Persons shall be
allocated a majority of such business entity's gains or losses or shall be or
control any managing director or general partner of such business entity). The
term "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, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, whether computed on a separate or consolidated, unitary or combined
basis or in any other manner, including any interest, penalty, or addition
thereto, whether disputed or not and including any obligation to indemnify or
otherwise assume or succeed to the Tax liability of any other Person. 

"Tax Return"
means any return, declaration, report, claim for refund, or information return
or 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 between
Seller and Buyer, in the form attached as Exhibit
A-4.

 

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

Section
1.2 Rules of Construction

.

 

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

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

(c) The term "including" is not
limiting and means "including, without limitation."

(d) Unless otherwise expressly provided
herein, (i) references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent amendments
and other modifications thereto, but only to the extent such amendments and
other modifications are disclosed to Buyer, (ii) references to any statute or
regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or
regulation, except that for purposes of determining the accuracy of any
representation, such reference shall only be to such statute or regulation as
in 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 provided
herein, "dollars" or "$" means the currency of the U.S. that, as
at the time of payment, is legal tender for the payment of public and private
debts.

(f) This Agreement is between financially
sophisticated and knowledgeable parties and is entered into by such parties in
reliance upon the economic and legal bargains contained herein, the language
used in this Agreement has been negotiated by the parties and their
representatives and shall be interpreted and construed in a fair and impartial
manner without regard to such factors as the party who prepared, or caused the
preparation of, this Agreement or the relative bargaining power of the parties.
The Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.

8

 

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

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

 

Section 1.3 Disclosure Schedules

.  The schedules
referred 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 an
exception to a representation or warranty made herein, unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail, including by explicit cross-reference
to another Disclosure Schedule to this Agreement.  Without limiting the generality of the foregoing, the mere
listing, or inclusion of a copy, of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein, unless the representation or warranty is being made as to the existence
of the document or other item itself. 
Seller and PFI are responsible for preparing and arranging the
Disclosure Schedules corresponding to the lettered and numbered sections of Articles
3 and 4, as applicable. The Disclosure
Schedules with respect to Articles 3 and 4will be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in Articles 3 and 4.

ARTICLE 2

PURCHASE
AND SALE

Section
2.1 Purchase and Sale of Assets

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

 

Section 2.2 Assumption of Liabilities

.  Upon the terms and
subject 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 any
responsibility, however, with respect to any other Liability of Seller not
included within the definition of Assumed Liabilities. 

 

Section 2.3 Purchase Price

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

9

 

(a) One Million
Dollars ($1,000,000) cash, minus amounts deposited by Buyer to Seller in
escrow, payable by wire transfer or delivery of other immediately available
funds;

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

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

                        

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

Section
2.4 Closing

.  Subject to the
terms and conditions of this Agreement and on the basis of the representations
and 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 the
Closing,

 

(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 any
necessary stock transfer tax stamps affixed thereto; 

(c) Buyer and Seller will execute, acknowledge (if
appropriate), 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 other
instruments of sale, transfer, conveyance, and assignment as Buyer and its
counsel may reasonably request; 

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

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

 

Section 2.6 Wage Tax Matters

.  The Parties agree
to utilize, or cause their respective Affiliates to utilize, the standard
procedure set forth in Revenue Procedure 

10

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

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND PFI
CONCERNING SELLER

 

Each of Seller and
PFI represents and warrants to Buyer, jointly and severally, that except as set
forth on the Disclosure Schedules:

 

Section 3.1 Organization of Seller

.  Seller is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware.

 

Section 3.2 Authorization of Transaction

.  Seller has full
power and authority (including full corporate or other entity power and
authority) to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder. Without limiting the generality of the foregoing, PFI, as Seller's
managing member, has duly authorized the execution, delivery, and performance
of this Agreement and the Ancillary Agreements by Seller. Upon execution, each
of this Agreement and the Ancillary Agreements to which the Seller is a party
constitutes the valid and legally binding obligation of Seller, enforceable in
accordance with its terms and conditions, except to the extent that
enforceability thereof may be limited by general equitable principles or the
operation 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 filing
with, any Governmental Authority or any Person, and no lapse of a waiting
period, is required (so as not to cause any of the results as set forth in
following sentence) to be obtained by the Seller or PFI in connection with (or
in order to permit) the execution, delivery or performance by either of them of
this Agreement or any of the Ancillary Agreements or the consummation of the
Contemplated Transactions (collectively, "Consents"),
except as set forth inSchedule
3.3.  Assuming all of the Consents have
been obtained, neither the execution and delivery by Seller and PFI of this
Agreement, nor the consummation of the Contemplated Transactions, nor the
performance 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 the
giving of notice or lapse of time, or both, would become a default) or any
right of termination, cancellation or acceleration of remedies or rights, (ii)
give to any other Person any right to purchase or sell assets or securities or
to exercise any remedy or modify any obligation or term, or (iii) otherwise
result in a loss of benefits to the Seller Business or the Seller, under the
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument 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 the
Seller 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 properties
or 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 any
Permit.  With respect to receiving the
consents identified on Schedule 3.3, the Seller has delivered or following
execution by the Buyer will deliver to the party from whom it is requesting
such consent all necessary documentation.

 

Section 3.4 Brokers' Fees

.  The Seller has no
Liability to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Buyer
could become liable or obligated. 

 

Section 3.5 Title to Assets

.  The Seller has
good 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 the
properties and assets used by the Seller, in the Ordinary Course of Business,
except for properties and assets disposed of in the Ordinary Course of
Business, since the date of the Most Recent Financial Statements, and
constitute all the personal assets and personal properties necessary for the
operation of the Seller's Business after the consummation of the Contemplated
Transactions in the same manner as heretofore.

 

Section 3.6 Subsidiaries

.  Seller has no
Subsidiaries.

 

Section 3.7 Financial Statements

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

Section
3.8 Events Subsequent to Date of Most Recent Financial Statements

.  Since the date of
the Most Recent Financial Statements, there has not been any Material Adverse
Change.  Without limiting the generality
of the foregoing, since the date of the Most Recent Financial Statements:

(a) the Seller has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a fair
consideration 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, and
licenses) either involving more than $50,000 or outside the Ordinary Course of
Business;

(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) involving
more 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 any
Lien upon any of its assets, tangible or intangible;

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

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

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

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

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

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

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

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

13

(m) the Seller has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or exercise) any of
its 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 any
other transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;

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

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

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

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

(t) the Seller has not made any other change in employment
terms for any of its directors, officers, and employees outside the Ordinary
Course of Business;

(u) the Seller has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;

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

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

(x) the Seller has not disclosed any Confidential
Information;

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

14

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

 

Section 3.9 Legal Compliance; Permits

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

 

Section 3.10 Tax Matters

.  

(a) The Seller has timely filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects 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 on
any Tax Return) have been paid. The Seller is not currently the beneficiary of
any extension of time within which to file any Tax Return. No claim has ever
been made by a Governmental Authority in a jurisdiction where the Seller does
not file Tax Returns that the Seller is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of the Seller that arose
in connection with any failure (or alleged failure) to pay any Tax.

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

(c) Neither the Seller nor any director or officer (or
employee responsible for Tax matters) of the Seller expects any Governmental
Authority to assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax Liability of
the Seller either (i) claimed or raised by any Governmental Authority in
writing 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 based
upon 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 for
taxable periods ended on or after December 31, 2003, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit.  The Seller
has delivered to Buyer correct and complete copies of all income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by the Seller since December 31, 2003.

(d) The Seller has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment 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 was
purported 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 use
pursuant to a valid and enforceable written license, sublicense, agreement, or
permission all Intellectual Property necessary for the operation of the Seller
Business. Each item of Intellectual Property owned or used by the Seller
immediately prior to the Closing will be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the Closing hereunder.
The Seller has taken all action reasonably necessary to maintain and protect
each 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 Property
rights 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 must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property 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 of
its Intellectual Property. The Seller has delivered to Buyer correct and
complete copies of all such customer agreements. Schedule 3.12(c)
identifies each unregistered trademark, service mark, trade name, corporate
name or Internet domain name, and each material unregistered copyright used by
the Seller. With respect to each item of Intellectual Property required to be
identified in Schedule 3.12(c):

(i) the Seller owns and possesses all right, title, and
interest in and to the item, free and clear of any Lien, license, or other
restriction 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 the
Seller, 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 for
or against any interference, infringement, misappropriation, or other conflict
with 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 a
third party, except for generally available commercial software identified in
Schedule 3.12(d).

(e) To the Knowledge of the Seller: (A) the Seller has not
in the past nor will interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties 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, any
demands or offers to license any Intellectual Property from any third party)
have been received.

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

Section 3.13 Tangible Assets

.  The Seller owns or
leases all machinery, equipment, and other tangible assets necessary for the
conduct of the Seller Business, other than real property. Each such tangible
asset is free from material defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which 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 complete
list 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 is
used in the Seller Business, that:

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

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

(iii) is a franchise, distributorship, manufacturing,
licensing, marketing, supply or sales agency agreement (whether or not
exclusive);

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 the
ability of the Seller or, to the Knowledge of the Seller, any key executive of
the Seller, to compete in any line of business or with any Person or in any
geographic area or during any period of time (except with respect to the use of
information pursuant to any confidentiality or non-disclosure agreement), (B)
requires the Seller to use any supplier or third party for all or substantially
all of the Seller's requirements or needs for any product or service in
connection with the Seller Business, (C) limits or purport to limits the
ability of the Seller to solicit customers or clients of the other parties
thereto, (D) requires the Seller to provide to the other parties thereto "most
favored nations" pricing or any type of exclusive dealing or other similar
arrangement, (E) requires the Seller to market or co-market any products or
services of a third party, or (F) contains any "take-or-pay" provisions or
similar arrangements requiring the Seller to make a minimum payment for goods
or 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 a
joint venture, partnership arrangement or other agreement that will be
terminated 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 and
another Person;

(viii) is a lease of real property;

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

(x) is a mortgage, pledge, security agreement or other
similar agreement with respect to any tangible or intangible property used in
the 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 of
the capital stock or the material assets of any other Person; 

18

(xv) to the extent not disclosed pursuant to any of the
clauses above, is an agreement that requires payments or performance during its
term 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 the
foregoing (collectively, the "Material
Contracts").

 

(b)
Neither the Seller nor, to the Knowledge of the Seller, any other Person that
is a party to a Material Contract or is otherwise bound thereby is in default
or breach thereunder, and, to the Knowledge of the Seller, no event,
occurrence, condition or act exists that, with the giving of notice or the
lapse of time or both, would give rise to any default, breach or right of
cancellation or modification thereunder. 
There has been no threatened cancellation of any of the Material
Contracts and there are no material outstanding disputes thereunder.  There are no defaults or breaches in respect
of the Contracts (exclusive of the Material Contracts) by the Seller or any
other 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 or
arrangements with any other Person in respect of the Material Contracts that
(i) give any Person the right to renegotiate or require a reduction in the
price 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 the
Seller or (iii) provide for discounts, allowances or extended payment
terms.  The
Material Contracts are in all respects consistent with Law and, to the
Knowledge of the Seller, are not the subject of any investigation, inquiry or
audit or action by a Governmental Authority.

 

Section 3.15 Powers of Attorney

.  There are no
outstanding powers of attorney executed on behalf of the Seller.

 

Section 3.16 Litigation

.  Seller is not
party to any litigation or subject of or to any investigation or outstanding
injunction, judgment, order, decree, or ruling.

 

Section 3.17 Employees

.  Seller has no
employees and maintains no Employee Benefit Plans.

 

Section 3.18 Guaranties

.  The Seller is not
a guarantor or otherwise liable for any Liability (including indebtedness) of
any other Person.

 

Section 3.19 Environmental, Health, and
Safety Matters

. 

(a) The Seller and its predecessors and Affiliates have
complied and are in compliance with all Environmental, Health, and Safety
Requirements.

19

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

(c) Neither the Seller nor its predecessors or Affiliates
have received any written or oral notice, report or other information regarding
any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any Liabilities, including any investigatory, remedial or
corrective obligations, relating to any of them or their facilities arising
under Environmental, Health, and Safety Requirements.

(d) Neither the Seller nor its predecessors or Affiliates
has 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 any
property or facility (and no such property or facility is contaminated by any
such substance) so as to give rise to any current or future Liabilities,
including any Liability for fines, penalties, response costs, corrective action
costs, personal injury, property damage, natural resources damages or
attorneys' 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 other
Environmental, Health, and Safety Requirements.

(e) Neither this Agreement nor the consummation of the
transactions that are the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government 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 Affiliates
has designed, manufactured, sold, marketed, installed, or distributed products
or other items containing asbestos, and none of such entities is or will become
subject to any Asbestos Liabilities.

(g) Neither the Seller nor its predecessors or Affiliates
has assumed, undertaken or otherwise become subject to any Liability, including
without limitation any obligation for corrective or remedial action, of any
other Person relating to Environmental, Health, and Safety Requirements.

Section
3.20 Certain Business Relationships With the Seller

.  No member of
Seller or any of their Affiliates (other than the Seller) has been involved in
any business arrangement or relationship with the Seller within the past 12
months, except that PFI is Seller's managing member, and none of the Seller's
members 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) largest
customers of the Seller (on a consolidated basis) for each of the 2 most recent
fiscal years and sets forth opposite the name of each such customer the
percentage of consolidated net sales attributable to such customer. Schedule
3.21 also lists any additional current customers that the Seller
anticipates shall be among the twenty (20) largest customers for the current
fiscal year.

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

 

Section 3.22 Product Warranty

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

 

Section 3.23 Product Liability

.  The Seller does
not have any Liability (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by the Seller.

 

Section 3.24 Employees

.  To the Knowledge
of the Seller, no executive or manager of the Seller (1) has any present
intention to terminate his or her employment, or (2) is a party to any
confidentiality, non-competition, proprietary rights or other such agreement
between such employee and any Person besides such entity that would be material
to the performance of such employee's employment duties, or the ability of such
entity or Buyer to conduct the business of such entity.

 

Section 3.25 Disclosure

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

21

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF PFI

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

 

Section 4.1 Authorization of Transaction

.  PFI has the legal
capacity to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party thereto and to perform its obligations
hereunder and thereunder.  Upon
execution, each of this Agreement and the Ancillary Agreements to which PFI is
a party constitutes the valid and legally binding obligation of PFI enforceable
in accordance with its terms and conditions, except to the extent that
enforceability thereof may be limited by general equitable principles or the
operation of bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar Laws.

 

Section 4.2 Ownership of Seller
Membership Interests

.  PFI owns a
majority of the Seller Membership Interests. 
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require PFI to sell, transfer, or otherwise
dispose of any capital stock of Seller.

 

Section 4.3 Brokers' Fees

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

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents
and warrants to Seller and PFI that, except as set forth on the Disclosure
Schedules:

 

Section 5.1 Organization of Buyer

.  Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of New York.

 

Section 5.2 Authorization of Transaction

.  Buyer has full
power and authority (including full corporate or other entity power and
authority) to execute and deliver this Agreement and each of the Ancillary
Agreements to which it is a party and to perform its obligations hereunder and
thereunder.  Without limiting the
generality of the foregoing, Buyer's board of directors has duly authorized the
execution, delivery, and performance of this Agreement and the Ancillary
Agreements by Buyer.  Upon execution,
each of this Agreement and the Ancillary Agreements to which Buyer is a party
constitutes the valid and legally binding obligation of Buyer, enforceable in
accordance with its terms and conditions, except to the extent that
enforceability thereof may be limited by general equitable principles or the
operation of bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or 

22

similar Laws.  The
execution, delivery and performance of this Agreement and the Ancillary
Agreements 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 filing
with, any Governmental Authority or any Person, and no lapse of a waiting
period, is required (so as not to cause any of the results as set forth in
following sentence) to be obtained by Buyer or in connection with (or in order
to permit) the execution, delivery or performance by Buyer of this Agreement or
any of the Ancillary Agreements or the consummation of the Contemplated
Transactions.  Neither the execution and
delivery by Buyer of this Agreement or any Ancillary Agreement to which Buyer
is 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 or
Buyer'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 or
acceleration of remedies or rights, (ii) give to any other Person any right to
purchase or sell assets or securities or to exercise any remedy or modify any
obligation or term, or (iii) otherwise result in a loss of benefits to Buyer or
its business, under the provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Buyer is a
party 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, or
any of their respective properties or assets; or (d) result in the creation or
imposition of any Lien upon any of the properties or assets of the Buyer or
used in its business.

 

Section 5.4 Brokers' Fees

.  Buyer has no
Liability to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Seller
could become liable or obligated.

 

Section 5.5 Authorization of Shares

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

 

Section 5.6 Full Disclosure

.  To Buyer's
knowledge, as of their respective dates, each of Buyer's reports, proxy
statements, or other documents filed with the Securities and Exchange
Commission since January 1, 2006 complied in all material respects with the
Laws applicable to such filing and did not contain any untrue statement of a
material fact or omit any material fact necessary to make the statements
contained therein, in light of the circumstances in which they were made,
untrue or not misleading.  Since
September 30, 2007, Buyer has not suffered any change, event, or condition
that, in any case or in the 

23

 

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

ARTICLE 6

PRE-CLOSING
COVENANTS

The Parties agree
as follows with respect to the period between the execution of this Agreement
and the Closing:

 

Section 6.1 General

.  Each of the
Parties will use his, her, or its reasonable best efforts to take all actions
and to do all things necessary, proper, or advisable in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the Closing conditions set forth in Article
7 below).

 

Section 6.2 Notices and Consents

.  The Seller will
give any notices to third parties, and the Seller and PFI will each use its
reasonable best efforts to obtain all Consents.  Each of the Parties will give any notices to, make any filings
with, and use his, her, or its reasonable best efforts to obtain any required
authorizations, consents, and approvals of any Governmental Authorities or
stock market. 

 

Section 6.3 Operation of Business

.  The Seller will
not engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. 

 

Section 6.4 Preservation of Business

.  The Seller will
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, insurance policies, and
relationships with lessors, licensors, suppliers, customers, and employees. 

 

Section 6.5 Full Access

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

 

Section 6.6 Notice of Developments

.  Each Party will give
prompt written notice to the other Party of any material adverse development
causing a breach of any of its own representations and warranties in Articles
3, 4, and 5 above. No disclosure by any Party pursuant to
this Section 6.6, however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant. 

 

Section 6.7 Exclusivity

.  Neither the Seller
nor PFI will (a) solicit, initiate, or encourage the submission of any proposal
or offer from any Person relating to the acquisition of any capital stock or
other voting securities, or any substantial portion of the 

24

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

ARTICLE 7  CLOSING CONDITIONS

Section
7.1 Conditions to Buyer's Obligation

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

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

(b) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by the term "material," or contain
terms such as "Material Adverse Effect" or "Material Adverse Change," in which
case Seller shall have performed and complied with all of such covenants (as so
written, including the term "material" or "Material") in all respects through
the Closing;

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

(d) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an 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 be
rescinded following consummation, or (iii) adversely affect the right of Buyer
to own the Acquired Assets and to operate the Seller's Business; 

(e) Seller shall have delivered to Buyer a certificate to
the 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 an
opinion in form and substance as set forth in Exhibit D attached hereto, addressed to Buyer and on which Buyer's
lenders shall be entitled to rely, and dated as of the Closing Date;

25

(g) Buyer shall have obtained on terms and conditions
reasonably satisfactory to it, the Buyer's requested financial or other
information of the Seller, including an audit of the Seller if required by the
regulations of the Securities and Exchange Commission. Buyer shall have the
right to select an auditor to conduct the audit of the Seller, and Buyer shall
bear the costs of such audit. Seller shall provide its best efforts to
cooperate with the selected auditor to complete the audit of the Seller in
order to consummate the transactions contemplated hereby;

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

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

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

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

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

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

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

 

Section 7.2 Conditions to Seller's
Obligation

.  Seller's
obligation to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:

(a) the representations and warranties set forth in Article
5 above shall be true and correct in all material respects at and as of the
Closing Date, except to the extent that such representations and warranties are
qualified by the term "material," or contain terms such as "Material Adverse
Effect" or "Material Adverse Change," in which case such representations and
warranties (as so written, including the term 

26

 

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

(b) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by the term "material," or contain
terms such as "Material Adverse Effect" or "Material Adverse Change," in which
case Buyer shall have performed and complied with all of such covenants (as so
written, including the term "material" or "Material") in all respects through
the Closing;

(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded 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 its
lenders, debt-holders or other third-party consents specified in Schedule
5.3; 

(e) Buyer shall have delivered to Seller a certificate to
the 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 an
opinion in form and substance as set forth in Exhibit E attached hereto, addressed to Seller and on which Seller
shall be entitled to rely, and dated as of the Closing Date;

(g) Seller shall have received copies of the certificate of
good standing of Buyer issued on or soon before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of Buyer's
organization and of each jurisdiction in which Buyer is qualified to do
business; 

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

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

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

27

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

Seller may waive any condition specified in this Section
7.2if it executes a writing so
stating at or prior to the Closing.

ARTICLE 8

POST-CLOSING
COVENANTS

 

Section
8.1 Further Assurances

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

 

Section 8.2 Non-Competition

.   Each
of Seller and PFI acknowledges that (a) Buyer would not have entered into this
Agreement but for the agreements and covenants contained in Sections 8.2-8.4
and (b) the agreements and covenants contained in this Section 8.2 are
essential to protect the business and goodwill of the Seller Business. To
induce Buyer to enter into this Agreement, Seller and PFI agree that, for a
period of three (3) years from the Closing (the "Restricted Period"), none of Seller, PFI, or any of its Affiliates
shall, directly or indirectly, own, manage, operate, join, control or
participate in the ownership, management, operation or control of, or be
employed or retained by, render services or sell products to (other than the
Seller), provide financing (equity or debt) or advice to, or otherwise be
connected in any manner with, a business that competes directly with the Seller
Business (the "Competing Business")
anywhere in the world. During the Restricted Period, none of Seller, PFI, or
any of their Affiliates, shall, directly or indirectly, hire, engage, offer to
hire, divert, entice away, solicit or in any other manner persuade or attempt
to persuade (a "Solicitation") any
Person who is, or was, at any time within the 12-month period prior to such
Solicitation, an officer, director, employee, agent, licensor, licensee,
customer, or supplier of Buyer or Seller to discontinue, terminate or adversely
alter his or its relationship with Buyer. 
In furtherance of this Section 8.2, the principal of PFI and the Company
shall enter into the Non-Competition and Non-Solicitation Agreement, in the
form attached hereto as Exhibit G.

 

Section
8.3 No Competing Interest

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

28

Seller any
ownership or similar interest in any material asset or property (including any
intellectual 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 one
hand, and any of its customers, contractees, suppliers or employees, on the
other hand.

 

Section 8.5 Non-Disparagement

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

 

Section
8.6 Confidentiality

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

 

Section
8.7 Change of Seller's Name

.  Immediately following the Closing, Seller
shall dissolve itself or change its corporate name to a name that does not
include either of the words "Axis" or "Graphics."

 

Section
8.8 Consents

.  To the extent that any Consents were not
obtained by the Seller prior to the Closing Date, each of Seller and PFI shall
use its best efforts after the Closing Date to assist Buyer in obtaining such
Consent. In addition, Seller and PFI shall maintain the license or agreement,
as applicable to which any such Consent relates unless and until notified
otherwise by the Buyer.  

 

Section
8.9 Remedies Upon Breach

.  Each of Seller and PFI acknowledges and
agrees that: (a) Buyer would be irreparably injured in the event of a breach by
the 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) monetary
damages would not be an adequate remedy for such breach; (c) Buyer shall be
entitled (without the need to post any bond) to injunctive relief or specific
performance, in addition to any other remedy that they may have, in the event
of any such breach; and (d) the existence of any claims that such Seller or PFI
may have against Buyer, whether under this Agreement or otherwise, shall not be
a defense to (or reason for the delay of) the enforcement by Buyer of any of
their rights or remedies under this Agreement. 
Buyer likewise acknowledges Seller's and PFI's rights to injunctive
relief respecting any breach or threatened breach by Buyer of Section 8.5.

29

ARTICLE
9

TERMINATION

 

Section 9.1 Termination
of Agreement

.  Certain of the Parties may terminate this
Agreement as provided below:

(a) Buyer and
Seller may terminate this Agreement by mutual written consent at any time prior
to the Closing;

(b) Buyer may
terminate this Agreement by giving written notice to Seller at any time prior
to the Closing (i) in the event Seller has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, Buyer has notified Seller of the breach, and the breach has
continued 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, by
reason of the failure of any condition precedent under Section 7.1
(unless the failure results primarily from Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and

(c) Seller may
terminate this Agreement by giving written notice to Buyer at any time prior to
the 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 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, by reason of the failure
of any condition precedent under Section 7.2 (unless the failure results
primarily from Seller itself breaching any representation, warranty, or
covenant contained in this Agreement).

 

Section
9.2 Effect of Termination

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

ARTICLE 10

INDEMNIFICATION

 

Section
10.1 Survival of Representations and Warranties

.  Except as provided in the immediately
succeeding sentence, all of the representations and warranties contained in Articles
3, 4 and 5 of this Agreement shall survive the Closing and
continue in full force and effect for a period of twenty-four (24) months
thereafter.  The representations and
warranties contained in (a) Sections 3.9 (Legal Compliance), 3.10 (Tax
Matters), 3.17 (Employees), and 3.19 (Environmental, Health and
Safety Matters) shall survive the Closing and continue in full force and effect
thereafter 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 Membership
Interests), 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 force
and effect indefinitely.

 

Section
10.2 Indemnification Provisions for Benefit of Buyer

.  

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

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

(i) Seller and PFI
shall be liable to Buyer only to the extent the aggregate amount of such
Adverse Consequences exceed Thirty Thousand Dollars ($30,000) (the "Basket"), at which time Seller and PFI
will be obligated to indemnify, defend and hold harmless Buyer from and against
all Adverse Consequences exceeding the Basket; and 

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

Notwithstanding the
limitations contained in Section 10.2(b), the Seller and PFI jointly and
severally agree to indemnify, defend and hold harmless Buyer from and against
the entirety of any Adverse Consequences Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability of
Seller which is not an Assumed Liability (including any Liability of Seller
that becomes a Liability of Buyer under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or successor
liability, or otherwise by operation of law); for avoidance of doubt, neither
the Basket nor the Cap shall apply to any breach by Seller or PFI of any
post-closing obligation under any of the Ancillary Agreements.

Section 10.3 Indemnification
Provisions for Benefit of the Seller and PFI

.  In the event Buyer breaches any of its
representations, warranties, and 

31

covenants contained
in this Agreement and, if there is an applicable survival period pursuant to Section
10.1above, provided that Seller
or PFI makes a written claim for indemnification against Buyer within such
survival period, then Buyer agrees to indemnify Seller or PFI from and against
the entirety of any Adverse Consequences Seller or PFI may suffer through and
after 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, that
Buyer's obligation to indemnify the Seller or PFI from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by the breach of any representation or warranty of Buyer contained in
this Agreement shall be subject to the same Basket and Cap that Buyer is
subject to as described above in Section 10.2(b); for avoidance of
doubt, neither the Basket nor the Cap shall apply to any breach by Buyer of any
post-closing payment or delivery obligation under any of the Ancillary
Agreements.

 

Section
10.4 Matters Involving Third Parties

.

(a) If any third
party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for indemnification against
any 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) Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as: 

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

(ii) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.

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

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

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

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

32

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

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

(i) the Indemnified
Party may defend against, and consent to the entry of any judgment or enter
into any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and, so long as acting reasonably, the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith),

 

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

 

(iii)  the Indemnifying Party will remain
responsible for any Adverse Consequences the Indemnified Party, so long as
acting reasonably, may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Article 10.

 

Section
10.5 Right of Set-Off

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

 

Section
10.6 Other Indemnification Provisions

.  The foregoing indemnification provisions are
the 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 for
indemnification against Buyer by reason of the fact that PFI was Seller's
managing member or was serving at the request of Seller as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise).

ARTICLE 11

MISCELLANEOUS

 

Section 11.1 Press Releases and Public
Announcements

.  No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the other Party; provided,
however, that any Party may make any public disclosure it
believes in good faith is 

33

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

 

Section 11.2 No Third-Party
Beneficiaries

.  This Agreement
shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.  

 

Section 11.3 Entire Agreement

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

 

Section 11.4 Succession and Assignment

.  This Agreement
shall be binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without 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 its
Affiliates, (b) designate one or more of its Affiliates to perform its
obligations hereunder, and (c) assign this Agreement or any of its rights and
obligations hereunder to a lender or lenders in connection with its financing of
the transactions contemplated hereby; provided
further, however that in the case of (a), (b), or (c) such assignment shall
not relieve Buyer of any of its obligations hereunder. 

 

Section 11.5 Counterparts

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

 

Section 11.6 Headings

.  The section
headings contained in this Agreement are inserted for convenience only and
shall 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 in
writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (a) when delivered personally to the recipient, (b)
one (1) Business Day after being sent to the recipient by reputable overnight
courier service (charges prepaid), (c) one (1) Business Day after being sent to
the recipient by facsimile transmission , or (d) four (4) Business Days after
being mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid, and addressed to the intended recipient as set
forth 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 information
only; communication by either means does not constitute notice.  Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to
be delivered by giving the other Party notice in the manner herein set forth.

 

Section 11.8 Governing Law

.This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to its laws governing conflicts of law.

 

Section 11.9 Amendments and Waivers

.  No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by Buyer, Seller and PFI.  No waiver by any Party of any
provision of this Agreement or any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be valid
unless 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 subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
default, misrepresentation, or breach of warranty or covenant.

Section 11.10 Severability

.  Any term or
provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.

 

Section 11.11 Expenses

.  Each Party will
bear its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.

 

Section 11.12 Governing Language

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

 

Section 11.13 Incorporation of Exhibits
and Schedules

.  The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.

 

Section 11.14 Specific Performance

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

 

Section 11.15 Submission to Jurisdiction

. Each of the Parties submits to the jurisdiction of any
state or federal court sitting in the borough of Manhattan, New York, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court.  Each
Party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto.  Any Party may make service on the other Party by sending or
delivering a copy of the process (i) to the Party to be served at the address
and 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 any
Party to bring any 

36

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

37

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

CHYRON CORPORATION

By: /s/ Michael
Wellesley-Wesley

Name: Michael Wellesley-Wesley

Title: President and Chief
Executive 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]_

CHYRON CORPORATION

SUBORDINATED 5.00%

PROMISSORY NOTE 

	
Note: AG1-08

$1,000,000
	
January 14, 2008

New York, New York

Chyron Corporation, a New York corporation (the "Company"), for value received, hereby promises to pay to Axis Graphics, LLC, a Delaware limited liability company, or its registered assigns (the "Holder"), the maximum principal sum of One Million Dollars ($1,000,000), or such lesser amount as shall equal the then outstanding principal amount hereof, plus accrued and unpaid interest on such outstanding principal amount at the rate of five percent (5.00%) per annum (computed on the basis of a 366 day year for the actual number of days elapsed), as set forth below, on December 31, 2008  ("Maturity").  Payment for all amounts due hereunder shall be made by mail to the registered address of the Holder, or, if requested in writing by the Holder, by wire transfer in accordance with the Holder's instructions.  

The following is a statement of the rights of the Holder and the conditions to which this Note is subject, and to which the Holder, by the acceptance of this Note, agrees:

1.   Payment of Principal and Interest.  

          (a)  Payment in Full on Maturity.  Unless this Note is sooner prepaid in accordance with the terms and conditions herein, or sooner becomes due and payable under Section 2 hereof, all outstanding principal of and accrued but unpaid interest on this Note shall be paid in full on Maturity; provided however that the Company may prepay this Note, in full or in part, at any time prior to Maturity, without penalty or further interest, by paying to the Holder the outstanding principal amount at such time, plus any accrued but unpaid interest on such principal amount as of the date of such payment. 

          (b)  Interest.  Interest shall accrue on the outstanding principal amount of this Note, at the rate of five percent (5.00%) per annum and will be payable quarterly (the "Coupon Rate") computed on the basis of a 366-day year, until the payment in full of all outstanding principal of and accrued interest on this Note.  Quarterly interest shall be payable on the following dates: for the quarter ended March 31, 2008, on April 1, 2008; for the quarter ended June 30, 2008, on July 1, 2008; for the quarter ended September 30, 2008, October 1, 2008; and for the quarter ended December 31, 2008, on December 31, 2008. All payments, including, without limitation, prepayments, made under this Note shall be applied first against accrued but unpaid interest and second against the outstanding principal balance hereof. Notwithstanding the foregoing provisions of this Section 1(b) or of Section 5, any amount not paid when due hereunder shall bear interest at the rate of ten percent (10.00%) per annum.

2.   Events of Default.  If one or more of the following events (each an "Event of Default") shall occur:

        (a)  the Company shall fail to pay in full any principal, accrued interest or other amounts due to Holder under this Note when due; 

 

        (b)  the Company shall default in the performance of or compliance with any other covenant, agreement or other obligation of the Company contained in this Note that is not remedied, waived or cured within thirty (30) days following written notice of such default in performance or noncompliance; 

        (c)  any representation or warranty of the Company contained herein shall prove to have been false or incorrect in any material respect as of the date of this Note;

        (d)  other than on terms approved beforehand by the Holder, the Company shall institute proceedings to be adjudicated as bankrupt or insolvent, or shall consent to institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition or answer or consent seeking reorganization or release under Title XI of the United States Code, or any other applicable federal or state law, or shall consent to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee or other similar official of the Company, or of any substantial part of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to satisfy its obligations as they become due, or shall take corporate action in furtherance of any such action; 

        (e)  within thirty (30) days after the commencement of an action against the Company (and service of process in connection therewith on the Company) seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution, or similar relief under any present or future statute, law, or regulation, such action shall not have been resolved in favor of the Company or all orders or proceedings thereunder affecting the operations or the business of the Company stayed, or the stay of any such order or proceeding shall thereafter be set aside, or within thirty (30) days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company, such appointment shall not have been vacated; or

        (f)  any plan of liquidation or dissolution or winding up is adopted by the Company's board of directors or shareholders or the Company is involuntarily dissolved or otherwise wound up; 

then, upon the occurrence of any Event of Default described in paragraph (a), (c), (d), (e) or (f) above, all outstanding principal of this Note and all accrued but unpaid interest thereon shall be accelerated automatically, without any further action by any party, and shall become immediately due and payable notwithstanding any other provision of this Note, without presentment, demand, protest, notice of protest or other notice of dishonor of any kind, all of which are hereby expressly waived by the Company; and upon the occurrence of any other Event of Default described in the other paragraphs above, Holder may, at Holder's option exercisable at any time after the applicable cure period, by notice to the Company in writing, accelerate this Note and declare the entire outstanding principal balance of this Note and all accrued but unpaid interest thereon immediately due and payable, without presentment, demand, protest, notice of protest or other notice of dishonor of any kind, all of which are hereby expressly waived by the Company.  Holder may enforce its rights under this Note and otherwise at law or in equity or both, all remedies available to Holder under this Note or otherwise shall be cumulative, and no course of dealing between the Company and Holder or any delay or omission in exercising any power or right shall operate as a waiver thereof.  The Company shall notify the Holder immediately in writing of the occurrence of any Event of Default, which notification shall include a summary of the material facts relating to such Event of Default and shall specify the date on which such Event of Default occurred.

 

3. Representations and Warranties of the Company.

(a) Organization; Good Standing. The Company is a legal entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on the operation of it business as now conducted and as proposed to be conducted. 

(b) Legal Capacity; Due Authorization. The Company has full legal capacity, power and authority to execute and deliver this Note and to perform its obligations hereunder and this Note has been duly executed and delivered by the Company. All action on the part of the Company and their respective officers and directors necessary for the authorization, execution and delivery of this Note, and the performance of all of the Company's obligations hereunder has been taken, and the obligations of the Company under this Note constitute valid and binding obligations of the Company, enforceable against the Company in accordance with the terms of this Note, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

4. Representations and Warranties of the Holder. The Holder's acceptance of this Note constitutes the Holder's confirmation that it is capable of evaluating the merits and risks of an investment and to bear the economic risk of such investment for an indefinite period of time and has acquired this Note for its own account, and not with a view to, or for resale in connection with, the distribution thereof in violation of the Securities Act.

5.   Ranking.  This Note shall be subordinated to (a) indebtedness of the Company under that certain Loan and Security Agreement (including any schedules and exhibits thereto), dated April 29, 2004, between the Company and Silicon Valley Bank, as modified by the Loan Modification Agreements thereto, as may be amended from time to time, and (b) any future indebtedness, for borrowed money, of the Company to a bank or other financial institution, or other obligations of the Company or liens on Company property arising from or relating thereto. For purposes hereof, "subordinated" means, only, that payments on this Note shall not be made when otherwise due, if (i) a Default, as defined in the Loan and Security Agreement referred to in clause (a) exists at such time, or would result from such payment, under the indebtedness referred to in such clause, or (ii) an equivalent circumstance exists or would exist under the relevant documentation in the case of indebtedness referred to in clause (b). Notwithstanding the foregoing, any failure to make or delay in making any payment hereunder at Maturity or on the date provided in Section 1(b) shall constitute an Event of Default hereunder.

6. Right of Set-Off. Any amount payable by the Holder to the Company pursuant to that certain Asset Purchase Agreement, dated January 14, 2008, by and among the Company, the Holder and Pyburn Films, Inc. (the "Purchase Agreement") may, at the Company's option and in its sole discretion, be set off against obligations due from the Company under this Note.

7.   Waiver and Amendment.  Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and the Holder.  Any amendment, waiver, modification or consent entered into pursuant to this Section 7 shall be effective only in the specific instance and for the specific purpose for which it was given.

 

 

8.   Transfer of this Note.  This Note may not be assigned, sold, transferred, pledged, assigned, hypothecated or otherwise disposed of by the Holder without the prior written consent of the Company. Any transfer of this Note shall be subject to compliance with applicable federal and state securities laws. Subject to the restrictions on transfer described in this Section 8, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

9.   Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given upon personal delivery; upon confirmed transmission by telecopy or telex if sent during normal business hours of the recipient (or if not, on the next business day of the recipient); three (3) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid; or otherwise upon delivery by hand or by messenger or one day after deposit with a nationally recognized courier service, addressed (a) if to Holder, to the Holder's address as set in the Purchase Agreement, or to such other address as such Holder shall have furnished to the Company in writing, or (b) if to the Company, to the Company's address as set forth in the Purchase Agreement, or to such other address as the Company shall have furnished to the Holder.

10.   Governing Law.  The Agreement shall be governed by, and construed under, the laws of the State of New York as applied to agreements among New York residents, made and to be performed entirely within the State of New York.

11.  Expenses.  The Company and the Holder shall each be responsible for and bear its own costs and expenses in connection with the negotiation and execution of this Note. 

12.  Lost, Stolen or Mutilated Note.  If this Note is lost, stolen, mutilated or destroyed, the Company will, on such reasonable terms with respect to indemnity or otherwise as it may in its discretion impose, issue a new note of like denomination, tenor, and date as this Note.  Any such new note shall constitute an original contractual obligation of the Company, and the lost, stolen, mutilated or destroyed, as applicable, Note shall be null and void.

 

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

COMPANY

CHYRON CORPORATION

By  /s/ Michael Wellesley-Wesley 

  Michael Wellesley-Wesley

Chief Executive Officer and President

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