Document:

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                                                                Exhibit 10(I)

                 CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN
                   PARKVALE SAVINGS BANK AND THOMAS R. ONDEK

         THIS CHANGE IN CONTROL SEVERANCE AGREEMENT is approved this 21st day of
December 2006 between Parkvale Savings Bank, a Pennsylvania-chartered stock
savings bank (the "Bank") and a wholly owned subsidiary of Parkvale Financial
Corporation (the "Corporation"), and Thomas R. Ondek (the "Executive"). The
Bank, including any successors to the Bank by merger or otherwise, is referred
to as the "Employer".

                                   WITNESSETH

         WHEREAS, the Executive is presently an officer of the Employer;

         WHEREAS, the Employer desire to be ensured of the Executive's
continued active participation in the business of the Employer; and

         WHEREAS, in order to induce the Executive to remain in the employ of
the Employer and in consideration of the Executive's agreeing to remain in the
employ of the Employer, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employer is terminated under specified circumstances;

         NOW THEREFORE, intending to be legally bound hereby and in
consideration of the mutual agreements herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as follows:

         1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:

         (a) ANNUAL COMPENSATION. The Executive's "Annual Compensation" for
purposes of this Agreement shall be deemed to mean the highest level of
aggregate base salary and cash incentive compensation paid to the Executive by
the Employer or any subsidiary thereof during the calendar year in which the
Date of Termination occurs (determined on an annualized basis) or the calendar
year immediately preceding the calendar year in which the Date of Termination
occurs, whichever year is higher.

         (b) CAUSE. Termination of the Executive's employment for "Cause" shall
mean termination because (i) the Executive intentionally engages in dishonest
conduct in connection with his performance of services for the Corporation or
the Bank resulting in his conviction of a felony; (ii) the Executive is
convicted of, or pleads guilty or nolo contendere to, a felony or any crime
involving moral turpitude; (iii) the Executive willfully fails or refuses to
perform his duties under this Agreement and fails to cure such breach within
fifteen (15) days following written notice thereof

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from the Bank; (iv) the Executive breaches his fiduciary duties to the Bank for
personal profit; or (v) the Executive willfully breaches or violates any law,
rule or regulation (other than traffic violations or similar offenses), or final
cease and desist order in connection with his performance of services for the
Bank, and fails to cure such breach or violation within fifteen (15) days
following written notice thereof from the Bank. For purposes of this section, no
act or failure to act on the part of the Executive shall be considered "willful"
unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission was in the
best interests of the Bank. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
written advice of counsel the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Bank. The cessation of employment by the Executive shall not be deemed to be
for "cause" within the meaning of this section unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of three-fourths of the non-employee members of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in this
section, and specifying the particulars thereof in detail.

(c) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the Corporation"
shall mean a change in the ownership of the Corporation or the Bank, a change in
the effective control of the Corporation or the Bank or a change in the
ownership of a substantial portion of the assets of the Corporation or the Bank
as provided under Section 409A of the Code, as amended from time to time, and
any Internal Revenue Service guidance, including Notice 2005-1, and regulations
issued in connection with Section 409A of the Code.

         (d) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

         (e) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination.

         (f) DISABILITY. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination because the Executive:
(i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Employer.

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         (g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:

                  (i)      Without the Executive's express written consent, the
                           assignment by the Employer to the Executive of any
                           duties which are inconsistent with the Executive's
                           positions, duties, responsibilities and status with
                           the Employer immediately prior to a Change in
                           Control of the Corporation, or a change in the
                           Executive's reporting responsibilities, titles or
                           offices as an employee and as in effect immediately
                           prior to such a Change in Control, or any removal of
                           the Executive from or any failure to re-elect the
                           Executive to any of such responsibilities, titles or
                           offices, except in connection with the termination of
                           the Executive's employment for Cause, Disability or
                           Retirement or as a result of the Executive's death or
                           by the Executive other than for Good Reason;

                  (ii)     Without the Executive's express written consent, a
                           reduction by either of the Employer in the
                           Executive's base salary as in effect immediately
                           prior to the date of the Change in Control of the
                           Corporation or as the same may be increased from time
                           to time thereafter or a reduction in the package of
                           fringe benefits provided to the Executive;

                  (iii)    The principal executive office of the Employer is
                           moved more than 30 miles from the current principal
                           executive office or, without the Executive's express
                           written consent, either of the Employer requires the
                           Executive to be based anywhere other than an area in
                           which the Employer's principal executive office is
                           located, except for required travel on business of
                           the Employer to an extent substantially consistent
                           with the Executive's present business travel
                           obligations;

                  (iv)     Any purported termination of the Executive's
                           employment for Cause, Disability or Retirement which
                           is not effected pursuant to a Notice of Termination
                           satisfying the requirements of paragraph (i) below;
                           or

                  (v)      The failure by the Employer to obtain the assumption
                           of and agreement to perform this Agreement by any
                           successor as contemplated in Section 6 hereof.

         (h) IRS. IRS shall mean the Internal Revenue Service.

         (i) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employer for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this

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Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the Employer's termination of the Executive's
employment for Cause, which shall be effective immediately; and (iv) is given in
the manner specified in Section 7 hereof.

         (j) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including early
retirement, generally applicable to their salaried employees.

         2. BENEFITS UPON TERMINATION. If the Executive's employment by the
Employer shall be terminated subsequent to a Change in Control of the
Corporation by (i) the Employer for other than Cause, Disability, Retirement or
the Executive's death, (ii) the Executive for any reason pursuant to a Notice of
Termination dated and delivered within the first 60 days following the one-year
anniversary of the Change in Control of the Corporation, or (iii) the Executive
for Good Reason, then the Employer shall

         (a) pay to the Executive, in a lump sum within five business days of
the Date of Termination, a cash severance amount equal to two (2) times the
Executive's Annual Compensation, and

         (b) maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of this Agreement as of the Date of Termination
or (ii) the date of the Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms of such employment to
benefits substantially similar to those described in this subparagraph (b)), at
no cost to the Executive, the Executive's continued participation in all group
insurance, life insurance, health and accident insurance, disability insurance
and other employee benefit plans, programs and arrangements offered by the
Employer in which the Executive was entitled to participate immediately prior
to the Date of Termination (excluding (y) stock benefit plans of the Employer
and (z) cash incentive compensation included in Annual Compensation), provided
that in the event that the Executive's participation in any plan, program or
arrangement as provided in this subparagraph (b) is barred, or during such
period any such plan, program or arrangement is discontinued or the benefits
thereunder are materially reduced, the Employer shall arrange to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans, programs and arrangements immediately
prior to the Date of Termination; and provided further, that if the provision of
any of the benefits covered by this Section 2(b) would trigger the 20% excise
tax and interest penalties under Section 409A of the Code either due to the
nature of such benefit or the length of time it is being provided, then the
benefit(s) that would trigger such tax and interest penalties due to the nature
of the benefit shall not be provided at all and the benefit(s) that would
trigger the tax and interest penalties if provided beyond the "limited period of
time" set forth in the regulations under Section 409A shall not be provided
beyond such limited period of time

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(collectively, the "Excluded Benefits"), and in lieu of the Excluded Benefits
the Employer shall pay to the Executive, in a lump sum within ten business days
following termination of employment or within ten business days after such
determination should it occur after termination of employment, a cash amount
equal to the cost to the Employer of providing the Excluded Benefits.

         3. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments
and benefits pursuant to Section 2 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employer or the Corporation, would constitute a "parachute payment" under
Section 280G of the Code, the payments and benefits payable by the Employer
pursuant to Section 2 hereof shall be reduced by the amount, if any, which is
the minimum necessary to result in no portion of the payments and benefits
payable by the Employer under Section 2 being non-deductible to the Employer
pursuant to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. If the payments and benefits are required to be
reduced, the cash severance shall be reduced first, followed by a reduction in
the fringe benefits to be provided in kind. The determination of any reduction
in the payments and benefits to be made pursuant to Section 2 shall be based
upon the opinion of independent counsel selected by the Employer and paid by the
Employer. Such counsel shall promptly prepare the foregoing opinion, but in no
event later than thirty (30) days from the Date of Termination; and may use such
actuaries as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 3, or a reduction in the
payments and benefits specified in Section 2 below zero.

         4. MITIGATION; EXCLUSIVITY OF BENEFITS.

         (a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.

         (b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.

         5. WITHHOLDING. All payments required to be made by the Employer
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employer may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

         6. ASSIGNABILITY. The Employer may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employer may hereafter merge or
consolidate or to which the Employer may transfer all or substantially all of
its respective assets, if in any such case said

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corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employer hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or its rights and obligations hereunder. The Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.

         7. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

         To the Corporation:         Corporate Secretary
                                     Parkvale Financial Corporation
                                     4220 William Penn Highway
                                     Monroeville, Pennsylvania 15146

         To the Bank:                Corporate Secretary
                                     Parkvale Savings Bank
                                     4220 William Penn Highway
                                     Monroeville, Pennsylvania 15146

         To the Executive:           Thomas R. Ondek
                                     At the address last appearing on the
                                     personnel records of the Employer

         8. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on
its behalf; provided, however, that if the Employer determines, after a review
of the final regulations issued under Section 409A of the Code and all
applicable Internal Revenue Service guidance, that this Agreement should be
further amended to avoid triggering the tax and interest penalties imposed by
Section 409A of the Code, the Employer may amend this Agreement to the extent
necessary to avoid triggering the tax and interest penalties imposed by Section
409A of the Code. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

         9. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
Pennsylvania.

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         10. NATURE OF EMPLOYMENT AND OBLIGATIONS.

         (a) Nothing contained herein shall be deemed to create other than a
terminable at will employment relationship between the Employer and the
Executive, and the Employer may terminate the Executive's employment at any
time, subject to providing any payments specified herein in accordance with the
terms hereof.

         (b) Nothing contained herein shall create or require the Employer to
create a trust of any kind to fund any benefits which may be payable hereunder,
and to the extent that the Executive acquires a right to receive benefits from
the Employer hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Employer.

         11. TERM OF AGREEMENT. The term of this Agreement shall be for three
years, commencing on the date of this Agreement (the "Effective Date").
Commencing on the first annual anniversary of the Effective Date, the term of
this Agreement shall extend for an additional year on each annual anniversary of
the Effective Date of this Agreement until such time as the Board of Directors
of the Employer or the Executive give notice in accordance with the terms of
Section 7 hereof of its or his election, respectively, not to extend the term
of this Agreement. As a consequence, subsequent to the first anniversary of the
Effective Date, the remaining term of this Agreement will stay between two and
three years unless notice of non-renewal is given. Such written notice of the
election not to extend must be given not less than thirty (30) days prior to any
such anniversary date. If any party gives timely notice that the term will not
be extended as of any annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the term
of this Agreement shall refer both to the initial term and successive terms.

         12. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the terms of this Agreement.

         13. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

         14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         15. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section
1828(k)) and the regulations promulgated thereunder, including 12 C.F.R.
Part 359.

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         16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Employer and the Executive with respect to the matters agreed to
herein. Any prior agreements between the Employer and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect.

         IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date of the restatement of this Agreement.

Attest:                                     PARKVALE FINANCIAL CORPORATION

/s/ Deborah M. Cardillo                       By: /s/ Robert J. McCarthy, Jr.
-----------------------------------------         ------------------------------
Deborah M..Cardillo, Corporate Secretary      Robert J. McCarthy, Jr., President
                                                and Chief Executive Officer

Attest:                                     PARKVALE SAVINGS BANK

/s/ Deborah M. Cardillo                       By: /s/ Robert J. McCarthy, Jr.
-----------------------------------------         ------------------------------
Deborah M. Cardillo, Corporate Secretary      Robert J. McCarthy, Jr., President
                                                and Chief Executive Officer

Attest:                                     EXECUTIVE

/s/ Deborah M. Cardillo                       By: /s/ Thomas R. Ondek
-----------------------------------------         ------------------------------
Deborah M. Cardillo, Corporate Secretary            Thomas R. Ondekexv10w2

 

Exhibit 10.2

TEKNIK DIGITAL ARTS, INC.

CONVERTIBLE NOTE PURCHASE AGREEMENT

     THIS CONVERTIBLE NOTE PURCHASE AGREEMENT (the “Agreement”) is made as of the ___day of ___,
2006 by and between Teknik Digital Arts, Inc., a Nevada corporation (the “Company”), and
the investors listed on Exhibit A attached to this Agreement (each a “Purchaser”
and collectively, the “Purchasers”).

RECITALS

     A. The Company desires to issue and sell and each Purchaser, severally and not jointly,
desires to purchase a convertible promissory note in substantially the form attached to this
Agreement as Exhibit B (the “Note”), which shall be convertible on the terms stated
therein into common stock, par value $.001 per share of the Company (“Common Stock”). The
Note and the shares of Common Stock upon conversion thereof are collectively referred to herein as
the “Securities.”

     B. The Company intends to offer a maximum of $1,500,000 of Securities during the period
commencing on May ___, 2006 to July 31, 2006 (the “Offering Period”). The Company and the
Placement Agent may, in their sole discretion, extend the Offering Period without notice of such
extension to any Purchaser.

AGREEMENT

     In consideration of the mutual promises contained herein and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties to this Agreement agree as
follows:

     1. Purchase and Sale of Notes.

          (a) Sale and Issuance of Note. Subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase at the Closing (as defined in Section I(b) herein) and the Company
agrees to sell and issue to Purchaser a Note in the principal amount specified with respect to such
Purchaser on Exhibit A to this Agreement. The purchase price of the Note shall be equal to
100% of the principal amount of such Note. The minimum amount of each Note shall be $50,000 unless
otherwise agreed upon between the Company and Girard Securities who is acting as the Placement
Agent.

          (b) Closing; Delivery. The purchase and sale of the Note shall take place at the
offices of the Company at the Company’s address set forth on the signature page hereto at 11:00
a.m., on the date hereof, or at such other time and place as the Company and each Purchaser
mutually agree upon, orally or in writing (which time and place are designated as the
“Closing”). At the Closing, the Company shall deliver to Purchaser the Note against payment
of the purchase

 

 

price therefor by certified or cashiers check or by wire transfer of immediately available funds to
a bank account of the Company specified in writing by the Company to the Purchaser.

     2. Stock Purchase Agreement. Purchaser understands and agrees that the conversion of
the Note into shares of Common Stock of the Company may require Purchaser’s execution of certain
agreements (in form and substance acceptable to Purchaser) relating to the purchase and sale of
such securities.

     3. No Security Interest. The indebtedness represented by the Note shall be unsecured.

     4. Representations and Warranties of the Company. The Company hereby represents and
warrants to Purchaser that:

          (a) Organization and Standing. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all requisite corporate
power and authority to carry on its business as now conducted and as proposed to be conducted.

          (b) Corporate Power. The Company has now, or will have at the Closing Date, all
requisite corporate power to enter into this Agreement and to sell and issue the Securities. This
Agreement is the valid and binding obligation of the Company enforceable in accordance with its
terms, except as the same may be limited by equitable principles and by bankruptcy, insolvency,
moratorium, and other laws of general application affecting the enforcement of creditors’ rights.

          (c) Subsidiaries. The Company does not control, directly or indirectly, any other
corporation, association or business entity.

          (d) Capitalization. The authorized capital stock of the Company is 50,000,000 shares
of Common Stock and 10,000,000 of Preferred Stock. As of immediately prior to the Closing, there
were issued and outstanding 9,125,000 shares of the Company’s Common Stock and options and warrants
to purchase an aggregate of 3,550,000 shares of Common Stock. All such issued and outstanding
shares of Common Stock and Series A Preferred Stock have been duly authorized and validly issued,
are fully paid and nonassessable. Except as set forth herein, there are no outstanding rights,
options, warrants, conversion rights or agreements for the purchase or acquisition from the Company
of any shares of its capital stock.

          (e) Corporate Action. All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the sale and issuance of the Securities and the
performance of the Company’s obligations hereunder and thereunder has been taken or will be taken
prior to the Closing.

          (f) Valid Issuance. The Securities, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable and will be free of any liens
or encumbrances caused or created by the Company; provided, however, that the

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Securities may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein, and as may be required by future changes in such laws.

          (g) Compliance with Articles and Bylaws. The Company is not in violation of any
material term of its Articles of Incorporation or Bylaws. The execution, delivery and performance
of and compliance with this Agreement and the issuance and sale of the Securities pursuant hereto
will not result in any such violation, or be in conflict with or constitute a default under any
such term.

          (h) Litigation. There is no action, suit, proceeding or investigation pending or, to
the Company’s knowledge, threatened against the company that questions the validity of this
Agreement or the right of the Company to enter into this Agreement or to consummate the
transactions contemplated hereby.

          (i) Governmental Consent, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part of the Company is
required in connection with the valid execution, delivery and performance of this Agreement, or the
offer, sale or issuance of the Securities, except, if required, filings or qualifications under the
applicable blue sky laws, which filings or qualifications, if required, will be timely filed or
obtained.

          (j) Use of Proceeds. The Company shall use the proceeds from the sale of the
Securities for working capital and general corporate purposes.

          (k) No Breach of Material Agreements. The Company has not breached, nor does the
Company have any knowledge of any claim or threat that the Company has breached, any term or
condition of any agreement which is material to the Company’s business or operations (“Material
Agreement”). Each Material Agreement is in full force and effect and, to the Company’s
knowledge, no other party to such Material Agreement is in default thereunder.

          (l) Disclosure Documents. The Company has delivered to Purchaser, the Company’s
balance sheets, and statements of operations of the Company for the last 3 quarterly reports (10Q)
and the most recent Annual Filing (10K), such financial statements being collectively referred to
herein as the “Financial Statements”) and the documents described on Exhibit C
attached hereto. Such Financial Statements (i) are in accordance with the books and records of the
Company, (ii) are true, correct and complete and present fairly the financial condition of the
Company at the date or dates therein indicated and the results of operations for the period or
periods therein specified, and (iii) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except, with respect to the unaudited
financials, for the omission of notes thereto and normal year-end audit adjustments.

          (m) C Corporation. The Company is and has been since its inception, a C corporation
for Federal and state income tax purposes.

3

 

          (n) Intellectual Property. The Company owns or possesses sufficient legal rights
to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and proprietary rights and processes necessary to the Company’s business as now
conducted and as presently contemplated to be conducted without any conflict with, or infringement
of, the rights of others. There are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and processes of any other
person or entity. The Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights or processes of any other
person or entity. The Company is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee’s best efforts to promote the interest of the Company or
that would conflict with the Company’s business. Neither the execution or delivery of this
Agreement, nor the carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as proposed, will, to the Company’s knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a default under, any
contract, covenant or instrument under which any such employee is now obligated. The Company does
not believe it is or will be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company.

          (o) Title to Property and Assets. The Company owns its property and assets free and
clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens which
arise in the ordinary course of business and do not materially impair the Company’s ownership or
use of such property or assets. With respect to the property and assets it leases, the Company is
in compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.

          (p) Insurance. The Company has in full force and effect fire and casualty insurance
policies, with extended coverage, sufficient in amount (subject to reasonable deductibles) to allow
it to replace any of its properties that might be damaged or destroyed.

          (q) Labor Agreements and Actions. The Company is not bound by or subject to (and none
of its assets or properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has requested or, to
the knowledge of the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the Company pending, or
to the knowledge of the Company threatened, which could have a material adverse effect on the
assets, properties, financial condition, operating results, or business of the Company, nor is the
Company aware of any labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at

          
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the will of the Company. The Company has complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related to employment.

          (r) Permits. The Company and each of its subsidiaries has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business, the lack of which
could materially and adversely affect the business, properties, prospects, or financial condition
of the Company. The Company is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.

     5. Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to the Company that:

          (a) Purchase Entirely for Own Account. The Securities to be acquired by Purchaser will
be acquired for investment for Purchaser’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. Purchaser has not been
formed for the specific purpose of acquiring any of the Securities.

          (b) Knowledge. Purchaser is aware of the Company’s business affairs and financial
condition and has acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the securities.

          ( c) Restricted Securities. Purchaser understands that the Securities have not been,
and will not be, registered under the Securities Act, by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Purchaser’s representations as expressed
herein. Purchaser understands that the Securities are “restricted securities” under applicable U.S.
federal and state securities laws and that, pursuant to these laws, Purchaser must hold the
Securities indefinitely unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and qualification
requirements is available. Purchaser acknowledges that the Company has no obligation to register or
qualify the Securities for resale except as set forth in the Investors’ Rights Agreement with
respect to Registrable Securities. Purchaser further acknowledges that if an exemption from
registration or qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of Purchaser’s control, and which the
Company is under no obligation and may not be able to satisfy.

          (d) No Public Market. Purchaser understands that no public market now exists for any
of the Notes issued by the Company and that the Company has made no assurances that a public market
will ever exist for the Securities. Although there is currently a public market for the Company’s
Common Stock, there can be no assurance that a public market will exist for the shares of the
Company’s Common Stock to be issued upon conversion of the Notes and registration of such shares or
at the time that such shares would otherwise be freely tradeable.

          
5

 

          (e) Legends. Purchaser understands that the Securities, and any securities issued in
respect thereof or exchange therefor, may bear one or all of the following legends:

               (i) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAYBE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.”

               (ii) Any legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so legended.

          (f) Accredited Investor. Purchaser is an accredited investor as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act.

     6. Conditions of the Purchasers’ Obligations at Closing. The obligations of Purchaser
to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of
each of the following conditions, unless otherwise waived:

          (a) Representations and Warranties. The representations and warranties of the Company
contained in Section 4 shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the Closing.

          (b) Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be
obtained and effective as of the Closing.

          (c) Execution of Registration Rights Agreement. The Company will execute the
Registration Rights Agreement as referenced in Section 8 below.

     7. Conditions of the Company’s Obligations at Closing. The obligations of the Company
to each Purchaser under this Agreement are subject to the fulfillment, on or before the Closing, of
each of the following conditions, unless otherwise waived:

          (a) Representations and Warranties. The representations and warranties of Purchaser
contained in Section 5 shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.

          (b) Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be
obtained and effective as of the Closing.

6

 

     8. Registration Rights. The Company agrees with each Purchaser to grant such
Person registration rights for the shares of Common Stock to be issued upon conversion of the
Notes. Specifically, the Company agrees to register such shares within 120 days from the close of
all sales of the Notes under this Agreement and for each month or portion thereof that the Company
fails to register the shares according to the foregoing, the Company shall pay a penalty to each
Note holder of 1 % of the principal outstanding balance of each Note as set forth in the
Registration Rights Agreement that is attached as Exhibit D. The Company and each Purchaser
agrees to execute the original of the form of the attached Registration Rights Agreement at
Closing.

     9. Miscellaneous.

          (a) Successors and Assigns. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this Agreement.

          (b) Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Arizona, without giving effect to principles of conflicts
of law.

          (c) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.

          (d) Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.

          (e) Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the
U.S. mail as certified or registered mail with postage prepaid, if such notice is addressed to the
party to be notified at such party’s address or facsimile number as set forth below or as
subsequently modified by written notice.

          (f) Commissions and Finder’s Fee.

               (i) Purchaser Commissions. Each Purchaser represents that it neither is nor will be obligated
for any finder’s fee or commission in connection with this transaction. Each Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any commission or compensation in
the nature of a finder’s fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees, or representatives
is responsible.

7

 

               (ii) Company Commissions. The Company represents that it is obligated to pay Girard
Securities, as Placement Agent, a cash commission of 10% of the gross proceeds of the sale of the
Notes, reimburse the Placement Agent for its expenses associated with
selling the Notes, has issued
to the Placement Agent warrants to purchase 250,000 shares of the Company’s common stock at $.75
per share and will issue additional warrants to the Placement Agent to purchase.5 shares of common
stock at $.75 per share for each $1.00 of Notes sold up to an additional 250,000 shares of common
stock. The exercise price of all warrants will be adjusted if the Company obtains any financing
below $.75 per share. The Company agrees to indemnify and hold harmless each Purchaser from any
liability for any commission or compensation in the nature of a finder’s fee (and the costs and
expenses of defending against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.

          (g) Amendments and Waivers. Any term of this Agreement may only be amended with the
written consent of the Company and the holders of at least a majority in interest of the Notes. Any
amendment or waiver effected in accordance with this Section 8(g) shall be binding upon the
Purchasers and each transferee of the Securities, each future holder of all such Securities, and
the Company.

          (h) Severabilitv. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith,
in order to maintain the economic position enjoyed by each party as close as possible to that under
the provision rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded
from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision
were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

          (i) Entire Agreement. This Agreement, and the documents referred to herein constitute
the entire agreement between the parties hereto pertaining to the subject matter hereof, and any
and all other written or oral agreements existing between the parties hereto are expressly
canceled. Purchaser acknowledges that it is not relying upon any person, firm or corporation, other
than the Company and its officers and directors, in making its investment or decision to invest in
the Company.

[Remainder of Page Intentionally Blank; Signature Pages Follow]

8

 

     The parties have executed this Convertible Note Purchase Agreement as of the date first
written above.

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	TEKNIK DIGITAL ARTS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 
	 

	 	Facsimile Number:	 	 
	 

	 	 	 	 

COMPANY SIGNATURE PAGE TO CONVERTIBLE NOTE PURCHASE AGREEMENT

9

 

	 	 	 	 
	 

	 	PURCHASER:	 
	 
	 	 	 
	 

	 	 	 

PURCHASER SIGNATURE PAGE TO CONVERTIBLE NOTE PURCHASE AGREEMENT

10

 

	 	 	 	 	 
	Exhibit A

	 	—
	 	Schedule of Purchasers
	 
	 	 	 	 
	Exhibit B

	 	—
	 	Form of Convertible Promissory Note
	 
	 	 	 	 
	Exhibit C

	 	—
	 	List of Documents Provided to Purchaser
	 
	 	 	 	 
	Exhibit D

	 	—
	 	Registration Rights Agreement

 

 

EXHIBIT A

SCHEDULE OF PURCHASERS

	 	 	 
	Name, Address and
	 	Original Principal
	Facsimile Number of Purchaser
	 	Amount of Note
	 
	 	 

 

 

EXHIBIT B

FORM OF CONVERTIBLE PROMISSORY NOTE

 

 

EXHIBIT C

SCHEDULE OF DOCUMENTS PROVIDED TO PURCHASER

 

 

EXHIBIT D

REGISTRATION RIGHTS AGREEMENT

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