BY AND AMONG

Exhibit 2.1

ASSET PURCHASE AGREEMENT

BY AND AMONG

SCIDEL TECHNOLOGIES, LTD.,

SCIDEL USA LTD.,

ADCO IMAGING LTD.,

AND

PRINCETON VIDEO IMAGE, INC.

DATED AS OF FEBRUARY 27, 2002

vii

TABLE OF CONTENTS

1. Sale of Assets and Assumption of Liabilities..................................... 1
1.1. Transfer of Assets and Assumption of Liabilities....................... 1
1.2. Purchased Assets....................................................... 1
1.3. Retained Assets........................................................ 3
1.4. Assumed Liabilities.................................................... 3
1.5. Liabilities Not Assumed................................................ 4
2. Purchase Price; Purchase Price Allocation........................................ 4
2.1. Purchase Price.......................................................... 4
2.2. Purchase Price Allocation............................................... 5
3. The Closing...................................................................... 5
4. Representations and Warranties of the Seller and the Subsidiaries................ 5
4.1. Organization, Good Standing, Authority.................................. 5
4.2. Subsidiaries; Capitalization............................................ 5
4.3. Authority; Execution; and Effect of Agreement........................... 6
4.4. Financial Statements; Closing Financial Condition....................... 6
4.5. Liabilities. ........................................................... 7
4.6. No Adverse Change....................................................... 7
4.7. Taxes................................................................... 7
4.8. Title; Condition of Purchased Assets; Absence of Encumbrances........... 9
4.9. Patents, Trademarks, and Copyrights..................................... 10
4.10. Contracts, Leases, and Commitments...................................... 10
4.11. Accounts Receivable..................................................... 11
4.12. Permits; Compliance with Laws........................................... 11
4.13. Employees............................................................... 12
4.14. Employee Benefit Plans.................................................. 13
4.15. Location of Assets...................................................... 14
4.16. Insurance............................................................... 14
4.17. Litigation.............................................................. 14
4.18. Transactions with Affiliates............................................ 15
4.19 Books and Records....................................................... 15
4.20. Improper Payments....................................................... 15
4.21. Products and Warranties................................................. 15
4.22. Product Liability, Auto Liability and Workers' Compensation............. 16
4.23. Government Grant Programs............................................... 16
4.24. Accredited Investor..................................................... 16
4.25. Legend.................................................................. 17
4.26. Business Affairs........................................................ 17
4.27. Brokers and Finders..................................................... 17
4.28. Completeness of Schedules and Exhibits.................................. 17
4.29. Disclosure.............................................................. 17
5. Representations and Warranties of the Purchaser and Parent....................... 17
5.1. Organization and Good Standing. ........................................ 17
5.2. Execution and Effect of Agreement....................................... 18

5.3. Restrictions; No Conflicts.............................................. 18
5.4. Organization and Good Standing of Parent................................ 18
5.5. Parent's Execution and Effect of Agreement.............................. 18
5.6. Disclosure.............................................................. 19
5.7. No Material Adverse Change.............................................. 19
5.8. Brokers and Finders..................................................... 19
6. Covenants of the Seller.......................................................... 19
6.1. Access by the Purchaser and the Parent.................................. 19
6.2. Conduct of Business..................................................... 20
6.3. Representations and Warranties.......................................... 20
6.4. No Negotiations......................................................... 20
6.5. Required Approvals...................................................... 21
6.6. Seller's and Subsidiaries' Records...................................... 21
6.7. Post-Closing Cooperation; Referral of Business.......................... 21
6.8. Change of Name.......................................................... 21
7. Covenants of the Purchaser....................................................... 22
7.1. Representations and Warranties.......................................... 22
7.2. Cooperation and Assistance.............................................. 22
7.3. Purchaser's Records..................................................... 22
8. Conditions Precedent to Obligations of the Purchaser............................. 22
8.1. Representations and Warranties.......................................... 23
8.2. Performance of the Seller............................................... 23
8.3. Delivery of Xxxx of Sale................................................ 23
8.4. Stockholders Agreement.................................................. 23
8.5. Opinion of Counsel of the Seller........................................ 23
8.6. Certificate............................................................. 23
8.7. Resolutions............................................................. 23
8.8. Consents................................................................ 23
8.9. Litigation.............................................................. 24
8.10. Release of Liens........................................................ 24
8.11. Employment Agreements................................................... 24
8.12. Non-competition Agreement............................................... 24
8.13 Patents and Applications Assignment Agreement........................... 24
8.14 Release of Escrowed Items............................................... 24
9. Conditions Precedent to Obligations of the Seller and the Subsidiaries........... 24
9.1. Representations and Warranties.......................................... 25
9.2. Performance by the Purchaser............................................ 25
9.3. Assumption of Liabilities; Purchase Price............................... 25
9.4. Opinion of the Purchaser's and Parent's Counsel......................... 25
9.5. Certificate............................................................. 25
9.6. Certified Resolutions................................................... 25
9.7. Litigation.............................................................. 25
9.8. Consents................................................................ 25
9.9. Stockholders Agreement.................................................. 25
10. Closing Deliveries............................................................... 26
10.1. Deliveries of the Seller and the Subsidiaries........................... 26
10.2. The Purchaser's Deliveries.............................................. 26

10.3 Dismissal of Patent Litigation.......................................... 27
11. Restrictive Covenant............................................................. 27
12. The Seller's and Subsidiary's Employees and Employee Benefits.................... 27
12.1. Employment.............................................................. 27
12.2. Severance Benefits...................................................... 27
12.3. Credit for Accrued Vacation............................................. 28
12.4. The Seller's and Subsidiary's Employment Agreements..................... 28
12.6. No Rights to Employment................................................. 28
13. Indemnification.................................................................. 28
13.1. Indemnification by the Seller and the Subsidiaries...................... 28
13.2. Indemnification by the Purchaser........................................ 29
13.3. Further Provisions Regarding Indemnification............................ 29
14. Termination...................................................................... 30
14.1. Termination Events...................................................... 30
14.2. Effect of Termination................................................... 30
14.3. Confidentiality......................................................... 31
15. Miscellaneous.................................................................... 31
15.1. Notices................................................................. 31
15.2. Dispute Resolution...................................................... 32
15.3. Entire Agreement; Modification and Waiver............................... 32
15.4. Successors.............................................................. 33
15.5. Section Headings........................................................ 33
15.6. Fees and Expenses; Sales Taxes.......................................... 33
15.7. Severability............................................................ 33
15.8. Governing Law........................................................... 33
15.9. Counterparts............................................................ 34

iii

INDEX OF SCHEDULES AND EXHIBITS

Schedules

1.2(a) Cash and Cash Equivalent Accounts
1.2(b) Accounts Receivable
1.2(c) Real Property and Leaseholds
1.2(d) Equipment and Personal Property
1.2(f) Trademarks, Service Marks, and Copyrights
1.2(g) Patents
1.2(h) Domain Names
1.2(j) Mortgages, Contracts and Insurance
1.2(k) Permits, Licenses and Authorizations
1.3 Retained Assets
1.5 Lender Debt
4 Disclosure Schedule
Section 4.1 Qualification Jurisdictions; Organization Document
Section 4.2 Subsidiaries; Capitalization
Section 4.5 Liabilities
Section 4.6 Adverse Changes
Section 4.7 Taxes
Section 4.8 Liens, Claims, and Encumbrances
Section 4.9 Intellectual Property
Section 4.10 Contract, Leases, Commitments
Section 4.10(a) Largest Suppliers
Section 4.10(b) Customers
Section 4.11 Accounts Receivable; Security Arrangements
Section 4.12 Government Licenses, Permits and Authorizations
Section 4.13 Employees
Section 4.14 Employee Benefit Plans
Section 4.16 Insurance
Section 4.17 Litigation
Section 4.18 Transactions with Affiliates
Section 4.21 Standard Terms and Conditions of Sale of Seller's and
Subsidiaries' Products and Services
Section 4.22 Workers' Compensation Claims
Section 4.23 Government Grant Programs
5.7 Material Adverse Changes to Parent
6.2 Conduct of Business
8.11 Retained Employees

Exhibits

2.1(a) Warrant Certificate
2.1(d)(ii) Form of Escrow Agreement
8.4 Form of Stockholder's Agreement
8.5 Opinion of Counsel to the Seller
8.12 Form of Non-competition Agreement
9.4 Opinion of Counsel to the Purchaser
10.3 Voluntary Dismissal Form

GLOSSARY

Definition Section

1933 Act......................................................... 4.24
Accounts Receivable.............................................. 1.2
Acquisition Proposal............................................. 6.4
Additional Sale Shares........................................... 2.1
Agreement......................................................Preamble
Assumed Liabilities.............................................. 1.4
Audited Balance Sheet............................................ 4.4
Business Information............................................. 1.2
Cash and Cash Equivalents........................................ 1.2
Claims........................................................... 4.8
Closing.......................................................... 3
Closing Agreement................................................ 4.7
Closing Date..................................................... 3
Compensation Plan................................................ 4.14
Consolidating Filer.............................................. 4.7
Disclosure Schedule..............................................4 Domain
d'mei havra'a....................................................4.13
Names............................................................ 1.2
Equipment........................................................ 1.2
Escrow Shares.................................................... 2.1
Grants........................................................... 4.23
Indemnitee.......................................................13.3
Indemnitor.......................................................13.3
Intellectual Property............................................ 4.9
Inventory........................................................ 1.2
Legal Requirements............................................... 4.3
Lender........................................................... 1.5
Lender Debt...................................................... 1.5
Losses...........................................................13.1
Office of the Chief Scientist.................................... 4.23
Parent .......................................................Preamble
Parent Securities................................................ 2.1
Party............................................................13.3
Patent Rights.................................................... 1.2
Permits.......................................................... 4.12
Plans............................................................ 4.14
Purchase Price................................................... 2.1
Purchased Assets................................................. 1.2
Purchaser's Documents............................................ 5.2
Purchasers ..................................................Preamble
Real Property.................................................... 1.2

Recent Balance Sheet............................................. 4.4
Related Persons.................................................. 4.18
Release Evidence................................................. 8.10
Retained Assets.................................................. 1.3
Retained Liabilities............................................. 1.5
Sale Shares...................................................... 2.1
SEC Reports...................................................... 5.6
Seller ......................................................Preamble
Sellers' Contracts............................................... 1.2
Sellers' Documents............................................... 4.3
Sellers' Permits................................................. 1.2
Severance Obligations............................................ 4.5
Subsidiaries ................................................Preamble
Subsidiary ..................................................Preamble
Taxes............................................................ 4.7
Tax Returns...................................................... 4.7
Tax Ruling....................................................... 4.7
Technology....................................................... 1.2
Trademarks, Service Marks and Copyrights......................... 1.2
Transferred Employees............................................12.1
Tzavei harchava..................................................4.13
Warrant Certificate.............................................. 2.1
Warrant Shares................................................... 2.1

vii

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated as of February 27, 2002 by
and among SciDel Technologies, Ltd., an Israeli corporation (the "Seller"),
SciDel USA Ltd. (the "Subsidiary"), Adco Imaging Ltd., an Israeli company (the
"Purchaser"), and Princeton Video Image, Inc., a Delaware corporation (the
"Parent").

RECITALS

Subject to the terms and conditions contained in this Agreement, the
parties desire that the Purchaser purchase, and the Seller and the Subsidiary
sell, substantially all of the assets of the Seller and the Subsidiary, and
Purchaser shall assume certain specifically identified liabilities related to
the business of the Seller and the Subsidiary. In consideration thereof, the
Seller, the Subsidiary, the Purchaser and the Parent desire to make the
covenants, conditions, representations, and warranties provided for herein.

NOW, THEREFORE, in consideration of and reliance on the
representations, warranties, covenants, and agreements contained herein, and
subject to the terms and conditions set forth in this Agreement, the parties
agree as follows:

1. Sale of Assets and Assumption of Liabilities.

1.1. Transfer of Assets and Assumption of Liabilities. At the Closing
(as defined in Section 3), (a) the Seller and the Subsidiary shall assign,
transfer, and deliver to the Purchaser, and the Purchaser shall purchase and
acquire from the Seller and the Subsidiary, all of the Purchased Assets (as
defined in Section 1.2), free and clear of any Claims (as defined in Section
4.8) other than as set forth in Section 4.8 of the Disclosure Schedule, but not
the Retained Assets (as defined in Section 1.3), which shall be retained by the
Seller or the Subsidiary, as the case may be, and which shall not be transferred
or conveyed pursuant to this Agreement; (b) the Purchaser shall assume the
Assumed Liabilities (as defined in Section 1.4); and (c) the Purchaser shall
deliver the Purchase Price (as defined in Section 2.1) to the Seller.

1.2. Purchased Assets. The "Purchased Assets" means all of the assets
and property of the Seller as of the Closing Date, (as defined in Section 3)
real or personal, tangible or intangible, wherever located, other than the
Retained Assets, including, without limitation, all of the Seller's right,
title, and interest in, to, and under the following:

(a) all cash and accounts of the Seller, including all
deposit, checking, brokerage, money market and other investment accounts,
wherever situated, including, without limitation, those described on Schedule
1.2(a) (the "Cash and Cash Equivalents");

(b) all accounts receivable of the Seller, including, without
limitation, all property described on Schedule 1.2(b), all prepaid expenses (to
the extent transferable to the Purchaser), vendor credits and credit balances
and deposits, price adjustments or rights with respect thereto, rebates, and
deposits with Bank Hapoalim regarding the guarantee of the lease dated June 23,
1998, by and between the Seller and Merkaz Taya Ltd., manufacturers and others
(the "Accounts Receivable");

(c) all real property and leasehold interests in real property
described in Schedule 1.2(c), together with all improvements and fixtures
thereon and interests therein, any prepaid rent, security deposits and options
to renew or purchase thereunder (the "Real Property");

(d) all equipment, machinery, tools, computer systems
(including all hardware and software), furniture, trade fixtures, personalty,
vehicles, and other personal property, whether owned, leased or otherwise held
by the Seller, including, without limitation, the property described on Schedule
1.2(d), and all rights of the Seller under or pursuant to all warranties,
representations and guaranties made by suppliers, manufacturers and contractors
in connection with the products sold to or services provided to the Seller, or
affecting the property heretofore described (the "Equipment");

(e) all office and other supplies, tools, spare parts,
advertising, and promotional materials;

(f) all common law and registered trademarks, service marks
and copyrights, and all unregistered trademarks or copyrights, logos, service
marks, trade dress, trade names and copyrightable words, and all applications,
registrations, certificates, Section 8 affidavits or foreign equivalents
(stating that a xxxx has been in continual use), renewals, investigations,
search reports, histories and other documents or files pertaining thereto,
including, without limitation, the trademarks, service marks and copyrights
described on Schedule 1.2(f) (the "Trademarks, Service Marks and Copyrights");

(g) all patents and patent applications, as well as all
reissues, divisions, continuations and continuation-in-part applications and any
other patents issuing thereon, and all license agreements and other agreements
which relate to inventions and discoveries and any patent applications and
patents thereon, as well as improvements therein which are owned, licensed, used
or held for use by the Seller, including, without limitation, the patents,
patent applications and licenses described on Schedule 1.2(g) (the "Patent
Rights");

(h) all domain names, World Wide Web addresses, net names and
other data or information of the Seller relating to the internet, including,
without limitation, as set forth on Schedule 1.2(h) (the "Domain Names");

(i) all technical information and know-how, confidential and
non-confidential, which is used or held for use by or on behalf of the Seller,
including, without limitation, all inventions, processes, formulae and all
discoveries, improvements, trade secrets and confidential data, whether or not
patented or patentable and whether or not copyrighted or copyrightable, computer
software, software licenses, patterns, plans, designs, schematics, diagrams,
research data, trade secrets and other proprietary know-how, formulae and
manufacturing, sales, service or other processes, operating manuals, drawings,
technology, equipment and parts lists (with related descriptions and
instructions), manuals, data, records, procedures, in process R&D, product
packaging instructions, product specifications, analytical methods, sources and
specifications for raw materials, toxicity and general health and safety
information, environmental compliance and regulatory information, research and
development

records and reports and other documents relating to the foregoing and all
licenses, approvals, authorizations or other rights to use intellectual
property rights of others ("Technology");

(j) all of the Seller's rights in and under the agreements
whether written or oral, to which the Seller is a party, mortgages, instruments,
leases for real or personal property, customer contracts, insurance policies,
marketing agreements and other agreements, including, without limitation, the
agreements described on Schedule 1.2(j) (the "Sellers' Contracts");

(k) all licenses, permits, filings and other governmental
authorizations, including, without limitation, the licenses, permits, filings
and authorizations described on Schedule 1.2(k) (the "Sellers' Permits");

(l) all rights of a successor employer for employment tax and
unemployment insurance purposes under applicable law (should the Purchaser
choose to avail itself thereof);

(m) blueprints, diagrams, schematics, instruction manuals,
maintenance manuals, reports and similar documents;

(n) all right, title and interest of the Seller in and to all
business information and related books and records used by the Seller in its
operation of its business, including, but not limited to, files, computer data,
computer discs and tapes, invoices, credit and sales records, personnel records
(subject to applicable law), payroll, current and former customer lists
(including customer contracts and agreements), current and former supplier lists
(including supplier cost information), manuals, drawings, business plans and
other plans and specifications, sales literature, current price lists and
discounts, promotional signs and literature, marketing and sales programs,
manufacturing and quality control records and procedures and any other files and
records relating to its business, whether or not held by the Seller or a third
party (collectively, the "Business Information"); provided, however, that the
Seller shall have the right of access to the Business Information after the
Closing as set forth in Section 7.3 hereof;

1.3. Retained Assets. The "Retained Assets" means (a) the Seller's and
the Subsidiary' rights under this Agreement; (b) the Seller's ownership of any
and all equity interests in the Subsidiary; (c) the Seller's and the
Subsidiary's minute book, stock certificate and membership interest book and
corporate records; (d) all tax returns and the work papers connected thereto;
(e) income tax receivables, including assets related to such receivables,
identified on Schedule 1.3; (f) any documents pertaining to the Retained
Liabilities; (g) all inter-company receivables; and (h) any other assets
specifically listed on Schedule 1.3 and not included as a Purchased Asset under
Section 1.2.

1.4. Assumed Liabilities. The "Assumed Liabilities" means (a) the
Seller's or Subsidiary' obligations under the Sellers' Contracts assigned to and
assumed by the Purchaser hereunder, arising after the Closing Date and not from
a breach of any obligation of Seller or the Subsidiary prior to the Closing
Date; and (b) the obligations of the Seller and the Subsidiary for routine
warranty service on products sold by the Seller or the Subsidiary in the
ordinary course of business, arising after the Closing Date and not from a
breach of any obligation of Seller or the Subsidiary prior to the Closing Date.

1.5. Liabilities Not Assumed. Except only for the Assumed Liabilities,
the Purchaser shall not assume, nor shall it be liable or obligated in any way
for any debts, liabilities, commitments, or obligations of the Seller or the
Subsidiary of any kind or nature whatsoever, whether absolute or contingent,
liquidated or unliquidated, and whether or not accrued, matured, known, or
suspected (the "Retained Liabilities"). The Seller and the Subsidiary, as the
case may be, shall remain fully and solely liable with respect to all of the
Retained Liabilities, including, without limitation, Seller's outstanding
principal and interest balance under the Seller's principal credit agreement
with Bank Leumi (the "Lender"), as described on Schedule 1.5 (the "Lender
Debt").

2. Purchase Price; Purchase Price Allocation.

2.1. Purchase Price.

(a) Total Consideration. In consideration for the Purchased
Assets and all of the covenants, conditions, representations and warranties of
the Seller and the Subsidiary, and in addition to the assumption of the Assumed
Liabilities by the Purchaser and the covenants, conditions, representations and
warranties of the Purchaser, the Parent shall issue to the Seller, subject to
the withholding of the Escrow Shares as set forth in Section 2.1(d) below: (i)
1,113,000 shares of Parent's Common Stock (the "Sale Shares") and (ii) Warrants
to purchase 670,500 shares of Parent's Common Stock (the "Warrant Shares") in
substantially the form of Warrant Certificate as attached hereto at Exhibit
2.1(a) (the "Warrant Certificate").

(b) Additional Sale Shares. The Parent shall issue to the
Seller at the Closing an additional 175,000 shares of Parent's Common Stock (the
"Additional Sale Shares") (collectively, the Sale Shares, Additional Sale Shares
and Warrant Shares are referred to as the "Purchase Price" or the "Parent
Securities" as the context requires).

(c) Adjustments. All references herein to a specific number of
Parent Securities, including the number of Sale Shares, Warrant Shares, and
Additional Sale Shares shall be appropriately adjusted to reflect any
reclassification, recapitalization or reorganization of the Parent's securities,
or any stock split, reverse stock split, stock dividend or similar event.

(d) Escrow Shares; Setoff; Delivery of the Escrow Shares.

(i) At the Closing, the Purchaser shall deliver to
the Seller certificates representing 469,000 of the Sale Shares, the Additional
Sale Shares and the Warrant Certificate. The remaining 644,000 Sale Shares (such
remaining amount, the "Escrow Shares"), shall be delivered to the Escrow Agent
(as defined herein) and the Escrow Agent shall hold the Escrow Shares in
accordance with the terms of the Escrow Agreement (as referred to below).

(ii) NECH. ME. Trustees (1992) Ltd., an Israeli
company, Registration No. 00-000000-0 shall act as the Escrow Agent in
accordance with an Escrow Agreement substantially in the form attached hereto as
Exhibit 2.1(d)(ii). The Escrow Agent shall hold the Escrow Shares for the
benefit of the Parties in accordance with the terms and conditions of the Escrow
Agreement until released as provided in this Section 2.1(d) (provided that the
Escrow Shares shall remain in escrow for such additional time as is necessary to
permit the resolution of any disputes).

(iii) The Seller shall be entitled to vote the Escrow
Shares. Stock and cash dividends paid with respect to the Escrow Shares, if any,
shall be paid to the Seller, provided that any shares of stock issued in
connection with a reclassification, recapitalization, reorganization, stock
split or similar event shall be treated as Escrow Shares and any property issued
with respect to the Escrow Shares in such an event shall be treated in the same
manner as the Escrow Shares.

2.2. Purchase Price Allocation. The parties acknowledge and agree that
the Purchaser's assumption of liabilities and obligations of the Seller and the
Subsidiary pursuant to Section 1.4, together with the payment of the Purchase
Price pursuant to Section 2.1, shall be allocated among the Purchased Assets in
accordance with the determination of an independent third party with experience
in such matters selected by the Parent with the consent of the Seller, which
consent shall not be unreasonably withheld. After the Closing, the parties shall
make consistent use of the allocation, fair market value and useful lives
determined by such third party for all tax purposes and in all filings and
reports with any tax authority. In any proceeding related to any determination
of any Taxes, as defined in Section 4.7 below, no party shall contend or
represent that such allocation is not a correct allocation.

3. The Closing. Subject to the satisfaction of the conditions set forth in
Sections 8 and 9 hereof, the closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at the offices of Meitar, Liquornik, Geva
& Co., Law Offices, 00 Xxxx Xxxxxx Xxxxxx Xx., Xxxxx-Xxx 00000, Xxxxxx on or
before March 13, 2002 (the "Closing Date"), or at such other location or on such
other date as the parties shall mutually agree.

4. Representations and Warranties of the Seller and the Subsidiary. Except as
set forth in the disclosure schedule attached hereto as Schedule 4 (the
"Disclosure Schedule") (which Disclosure Schedule shall contain appropriate
references to applicable Sections and subsections of the Agreement to which such
Section and subsection references relate), the Seller and the Subsidiary,
jointly and severally, represent, warrant, and agree that, at and as of the date
of this Agreement and at and as of the Closing Date, the following statements
shall be true in all respects:

4.1. Organization, Good Standing, Authority. The Seller is duly
organized and validly existing under the laws of Israel and has full power and
authority to own and lease its respective assets and properties and to conduct
its business as it is now being conducted.

4.2. Subsidiaries; Capitalization.

Except as listed in Section 4.2 of the Disclosure Schedule,
the Seller has no Subsidiaries and has no equity interest in any corporation,
partnership, joint venture, or other entity. The Subsidiary listed on the
Disclosure Schedule is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation (which
jurisdiction is also identified in Section 4.2 of the Disclosure Schedule), and
has full power and authority to own, use and lease its Assets and Properties.
The Subsidiary is duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which conduct

of the Subsidiary's business or ownership or leasing of its assets requires such
qualification (and such jurisdictions are identified on Section 4.2 of the
Disclosure Schedule).

4.3. Authority; Execution; and Effect of Agreement. The Seller and the
Subsidiary has the full right, power, and authority to enter into and to perform
this Agreement and all other agreements, certificates, and documents executed or
delivered, or to be executed or delivered, by it in connection with this
Agreement (collectively with this Agreement, the "Sellers' Documents"). This
Agreement has been duly authorized, executed, and delivered by the Seller and
the Subsidiary, and together with the other Sellers' Documents, are (or when
executed and delivered will be) the legal, valid, and binding obligations of the
Seller and the Subsidiary, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and similar laws affecting creditor's rights generally and to general principles
of equity. The authorization, execution, delivery, and performance of the
Sellers' Documents and the consummation of the transactions contemplated by the
Sellers' Documents do not and will not (a) violate, or require the consent of
any party under, any of the provisions of Seller's or the Subsidiary's articles
of organization, certificate of incorporation, by-laws or other Organizational
Document, (b) violate, conflict with, result in a breach of or constitute a
default under, require any notice or consent under, give rise to a right of
termination of, or accelerate the performance required by, any terms or
provisions of any agreement, instrument or writing of any nature to which the
Seller or the Subsidiary is a party or is bound or any of its assets or business
is subject, or (c) to the best of Seller's and the Subsidiary's knowledge,
violate, conflict with or result in a breach of, or require any notice, filing
or consent under, any statute, rule, regulation or other provision of law, or
any order, judgment or other direction of a court or other tribunal, or any
other governmental requirement, permit, registration, license, or authorization
(the "Legal Requirements") applicable to the Seller or the Subsidiary or the
Purchased Assets. Neither the Seller nor the Subsidiary is a party to any
non-compete or similar agreement, which in any way restricts the operation of
its business.

4.4. Financial Statements; Closing Financial Condition. The Seller has
furnished the Purchaser with its (i) consolidated audited balance sheets and
financial statements as of each of the years ended December 31, 1998, December
31, 1999 and December 31, 2000, (ii) consolidated [unexecuted] balance sheets
and financial statements as of the year ended December 31, 2001 and (iii)
reviewed balance sheets and financial statements for the periods ended March 31,
2001, June 30, 2001 and September 30, 2001. As of the Closing, Section 4.4 of
the Disclosure Schedule shall contain true and complete copies of (a) the
audited balance sheet and financial statements of the Seller (on a consolidated
basis) and balance sheet and financial statements of the Subsidiary as of, and
for the twelve month period ending, December 31, 2001 (such balance sheet is
referred to as the "Audited Balance Sheet") and (b) the unaudited balance sheet
and financial statements of the Seller (on a consolidated basis) and balance
sheet and financial statements of the Subsidiary as of, and for the 3-month
period ending March 31, 2002 (such balance sheet is referred to as the "Recent
Balance Sheet"). The aforesaid financial statements (x) are in accordance with
the books and records of the Seller and the Subsidiary and have been prepared on
a consistent basis for all periods presented, and (y) are true, complete and
accurate, are prepared in accordance with generally accepted accounting
principles applied on a consistent basis, and fairly present in accordance with
generally accepted accounting principles, as applied in Israel, the financial
position of the Seller and the Subsidiary as of the respective dates thereof,
and the results of operations (or income or loss), changes in equity and changes
in

cash flow (or financial position) for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring year-end adjustments). Except
as set forth in Section 4.4 of the Disclosure Schedule, to the best of Seller's
and the Subsidiary's knowledge, there are no contingent items that could have a
material impact on the net asset value of the Seller or the Subsidiary. Seller
has also delivered to the Purchaser copies of all letters from Seller's and the
Subsidiary's auditors to Seller's or the Subsidiary's board of directors or the
audit committee thereof during the thirty-six (36) months preceding the
execution of this Agreement, together with copies of all responses thereto.

4.5. Liabilities. All liabilities of the Seller and the Subsidiary
(whether accrued, unaccrued, matured, unmatured, contingent, or otherwise, and
whether due or to become due) are set forth or adequately reserved against on
the face of the Recent Balance Sheet, except for liabilities incurred since the
date thereof in the ordinary course of business as theretofore conducted, which
are not materially adverse to the operations or prospects of its business. The
indebtedness and other liabilities of the Seller and the Subsidiary have not
been guaranteed or assumed by any other person. Section 4.5 of the Disclosure
Schedule accurately identifies and describes each debt, liability, commitment,
and other obligation of the Seller and the Subsidiary as of the date of this
Agreement (including, without limitation, the name of each creditor, the amount
of each debt, liability, commitment, and obligation), other than the Lender Debt
and severance obligations owed, or that may become due and owing, by the Seller
or the Subsidiary to any employees thereof (the "Severance Obligations"). There
are no liabilities against, relating to or affecting any of the Purchased
Assets, other than the Assumed Liabilities.

4.6. No Adverse Change. Since the date of the Audited Balance Sheet,
except as reflected in the Recent Balance Sheet or as set forth in Section 4.6
of the Disclosure Schedule, the Seller and the Subsidiary has operated its
business diligently and only in the ordinary course of business as theretofore
conducted, and there has been no: (a) material adverse change in its business,
properties, assets, liabilities, commitments, earnings, financial condition, or
prospects of the Seller or the Subsidiary, taken as a whole, other than those
generally affecting persons in Seller's business, those generally affecting the
economy, those generally affecting the advertising market, and those resulting
from changes in general economic, political or financial conditions, including
without limitation changes occurring as a result of terrorist activities, the
effect of international conditions on the financial markets in the United States
and the escalation in hostilities involving Israel and/or the United States; (b)
property damage or destruction resulting in a loss or cost to the Seller or the
Subsidiary of more than Fifty Thousand Dollars ($50,000) in the aggregate,
whether or not covered by insurance; or (c) act or omission which, if taken or
omitted after the date of this Agreement and before the Closing would conflict
with Section 6.2 hereof. There is no fact known to the Seller or the Subsidiary
that materially adversely affects, or in the future will be likely to have a
material adverse affect on, the Purchased Assets, Assumed Liabilities or the
prospect or condition of its business.

4.7. Taxes. The term "Taxes" means taxes, additions to tax, penalties,
interest, fines, duties, withholdings, assessments and charges assessed or
imposed by any governmental authority, including, but not limited to,
authorities of the State of Israel, and including, but not limited to, income,
profits, import, ad valorem, real and personal property, sales, stamp, capital
stock, withholding, payroll, employment, unemployment, excise, custom, duty and
any other taxes, obligations and assessments of any kind whatsoever; and the
term "Tax" means any one of

the foregoing Taxes. In addition, the term "Tax Returns" means all returns,
declarations, reports, statements and other documents required to be filed with
any authority in respect of Taxes, and the term "Tax Return" means any one of
the foregoing Tax Returns. Except as set forth in Section 4.7 of the Disclosure
Schedule:

(a) Filing of Tax Returns. The Seller and the Subsidiary has
filed (or caused to be filed) or will file (or caused to be filed) all Tax
Returns required to be filed by the Seller or the Subsidiary on or before the
Closing Date and has paid (or caused to be paid) or will pay all Taxes of any
nature whatsoever properly due in connection therewith, including interest and
penalties. As of the time of filing, the Tax Returns correctly reflected or will
reflect the facts regarding its business, and the income, assets, operations,
activities, status or other matters of the Seller and the Subsidiary as the case
may be, or any other information required to be shown thereon. There is and will
be no material omission, deficiency, error, misstatement or misrepresentation,
whether innocent, intentional or fraudulent, in any Tax Return filed or to be
filed by the Seller and the Subsidiary for any period.

(b) Payment of Taxes. With respect to all amounts in respect
of Taxes imposed upon the Seller and the Subsidiary with respect to Taxes
arising from the Seller's operations, the Subsidiary's operations, or for which
the Seller or the Subsidiary is liable, whether to taxing authorities or to
other persons or entities (as, for example, under tax allocation agreements),
with respect to all taxable periods or portions thereof ending on or before the
Closing Date, including Taxes arising as a result of the transactions
contemplated by this Agreement, and except as specifically listed under Schedule
4.7(b), all applicable Tax laws and agreements have been or will be fully
complied with, and all such amounts of Taxes required to be paid by the Seller
and the Subsidiary (whether or not shown on any Tax Return) to taxing
authorities or others for all taxable periods or portions thereof ending on or
before the Closing Date have been duly paid or will be paid on or before the
Closing Date or adequate provision has been made therefore by Seller and the
Subsidiary, including any Taxes payable by the Seller and the Subsidiary in any
post-Closing Date period for any pre-Closing Date Taxes.

(c) Independent Contractors and Employees. For purposes of
computing Taxes and the filing of Tax Returns, none of the Seller, the
Subsidiary or any Consolidating Filer has failed to treat as an "employee" any
individual providing services to the Seller or the Subsidiary who would be
classified as an "employee" under the applicable rules or regulations of any
authority with respect to such classification.

(d) Withholding. The Seller and the Subsidiary has complied
with all applicable laws relating to the withholding of Taxes and the payment
thereof, and timely and properly withheld from individual employee wages and
paid over to the proper governmental entity all amounts required to be so
withheld and paid over under all applicable laws.

(e) Tax Liens. There are, and as of the Closing Date, there
will be no liens for Taxes upon any assets of the Seller or the Subsidiary,
except liens for Taxes not yet due. On or after the Closing Date, no taxing or
similar authority will have any ability to file a lien against or otherwise
claim an interest in any of the Purchased Assets with respect to any Taxes of
the Seller, or the Subsidiary for (i) any taxable period or portion thereof
ending on or before the Closing Date or (ii) the transactions contemplated by
this Agreement.

(f) Extensions. Neither the Seller nor the Subsidiary has
agreed to any extension of time within which to file any Tax Return, which Tax
Return has not since been filed.

(g) Waivers. Neither the Seller nor the Subsidiary has
executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns.

(h) Deficiencies. No deficiency for any Taxes has been
proposed, asserted or assessed against the Seller or the Subsidiary. No audits
or other administrative proceedings or court proceedings are presently ongoing
with regard to any Taxes or Tax Returns of the Seller or the Subsidiary, and no
Tax authority has notified the Seller or the Subsidiary that it intends to
investigate its or their Tax affairs.

(i) Power of Attorney. No power of attorney currently in force
has been granted by the Seller or the Subsidiary concerning any Tax matter.

(j) Tax Ruling; Closing Agreement. Neither the Seller nor the
Subsidiary has received a Tax Ruling or entered into a Closing Agreement with
any Tax authority that would have a continuing adverse effect upon the Seller or
the Subsidiary after the Closing Date. For purposes of the preceding sentence,
"Tax Ruling" shall mean a written ruling of any Tax authority relating to Taxes,
and "Closing Agreement" shall mean a written and legally binding agreement with
a Tax authority relating to Taxes.

4.8. Title; Condition of Purchased Assets; Absence of Encumbrances.

(a) The Seller and the Subsidiary, as the case may be, has
good and marketable title to all of the Purchased Assets, free and clear of all
liens, mortgages, pledges, security interests, restrictions, prior assignments,
claims, and encumbrances of any kind whatsoever (collectively, "Claims"), except
as may be set forth in Section 4.8 of the Disclosure Schedule, with respect to
which no breach, violation or default exists, and on the Closing Date, the
Seller and the Subsidiary will transfer or will cause to be transferred to the
Purchaser good and marketable title to all of the Purchased Assets free and
clear of all Claims of any kind whatsoever.

(b) Schedule 1.2(c) contains a complete and correct list of
all of the Real Property (including buildings and structures) owned or leased by
the Seller or the Subsidiary and all interests therein (including a brief
description of the property, the record title holder, the location and the
improvements thereon).

(c) The Equipment (including, but not limited to, all
vehicles) and other personal property which are included in the Purchased Assets
are in good operating condition and repair and fit for their current use,
ordinary wear and tear and normal maintenance excepted.

(d) Other than the Retained Assets, the Purchased Assets
include all of the assets and properties of the Seller and of the Subsidiary,
including all agreements. All leasehold interests relating to Real Property and
Equipment (including, but not limited to, any vehicles) and other personal
property which are included in the Purchased Assets are valid and in full force

and effect to the knowledge of the Seller and the Subsidiary with respect to the
other parties thereto and enforceable in accordance with their terms, and there
does not exist any material violation, breach, or default thereof or thereunder
by the Seller, the Subsidiary or any other party thereto.

4.9. Patents, Trademarks, and Copyrights. The Seller and the Subsidiary
owns or possesses all trademarks, service marks, trade names, brands, registered
copyrights, and patents which are presently being used in its business or have
been used in its business, all applications for registration and registrations
for such trademarks, service marks, copyrights, and patents, and all licenses,
contracts, rights, and arrangements with respect to each of the foregoing
(collectively, the "Intellectual Property"); a list and brief description of
each item of the Intellectual Property is set forth in Schedules 1.2(f) and (g).
The Seller or the Subsidiary has furnished to the Purchaser true and complete
copies of each of the foregoing. Except as set forth in Schedule 4.9, the Seller
or the Subsidiary owns the entire, unencumbered right and title to all such
items of Intellectual Property, and to the knowledge of the Seller and the
Subsidiary, are free and clear of all Claims. Except as set forth in Schedules
1.2(f) and (g), no rights or licenses to others have been granted with respect
to any of such properties and no royalty payments are made to anyone under or
with respect to such properties. All filings and other action, including without
limitation payment of maintenance and other required fees, necessary to perfect
or maintain the full legal right of the Seller and the Subsidiary to the
foregoing patents, trademarks, service marks and copyrights have been effected.
The Seller or the Subsidiary owns or possesses the right to use all the
trademarks, service marks, trade names, brands, copyrights, patents, franchises,
permits, licenses, and rights with respect to the foregoing items of
Intellectual Property, necessary for the conduct of its business as it is now
conducted, and, to the best of its knowledge, without any conflict with or
infringement of the rights of others. Except as disclosed in Section 4.9 of the
Disclosure Schedule: (a) all registrations with and applications to government,
governmental agency, office, corporation, entity or other regulatory authority
in respect of any Intellectual Property owned by the Seller or the Subsidiary
are valid and in full force and effect; (b) there are no restrictions on the
direct or indirect transfer of any license, or any interest therein, held by the
Seller or the Subsidiary in respect of Intellectual Property; (c) neither the
Seller nor the Subsidiary is in default (or with the giving of notice or lapse
of time or both would be in default) in any respect under any license to use the
Intellectual Property; and (d) to the knowledge of the Seller and the
Subsidiary, the Intellectual Property is not being infringed by any other Person
(as defined in Section 4.18). Other than the Parent's claim against the Seller,
neither the Seller nor the Subsidiary has received notice that the Seller or the
Subsidiary is infringing any Intellectual Property right of any other person, no
claim is pending or has been made to such effect that has not been resolved, and
neither the Seller nor the Subsidiary is, to the best of its knowledge,
infringing any Intellectual Property rights of any other person.

4.10. Contracts, Leases, and Commitments. The Seller and the Subsidiary
has furnished to the Purchaser true and complete copies the Sellers' Contracts,
including summaries of the terms of any material and binding unwritten
contracts, leases, or commitments. Except as set forth in Section 4.10 of the
Disclosure Schedule: (a) the Seller and the Subsidiary, as the case may be, has
complied in all material respects with such Sellers' Contracts, all of which are
valid and enforceable and will not be adversely affected by this acquisition or
the transfer in connection therewith to the Purchaser; and (b) such Sellers'
Contracts are in full force and effect

and there exists no breach thereof by the Seller, the Subsidiary or any other
party, as the case may be, which with or without notice or lapse of time would
be a default thereunder, give rise to a right to accelerate or terminate any
provision thereof, or give rise to any lien, claim, encumbrance, or restriction
on any of the assets or properties of the Seller or the Subsidiary. Neither the
Seller nor the Subsidiary is a party, and none of the Seller's or the
Subsidiary's assets or businesses subject, to any contract, lease, or commitment
not listed in Schedule 1.2(j) (including, without limitation, "open" purchase or
sales commitments, financing or security agreements or guaranties, repurchase
agreements, agency agreements, manufacturers representative agreements,
commission agreements, employment or collective bargaining agreements, pension,
bonus, or profit-sharing agreements, group insurance, medical or other fringe
benefit plans, and leases of real or personal property). If any of the Sellers'
Contracts should provide for expiration or be subject to termination before the
Closing, the Seller or the Subsidiary, as the case may be, shall use its best
efforts to extend such contracts on reasonable terms in accordance with the
Seller's or the Subsidiary's past practice, after consultation with the
Purchaser. Neither the Seller nor the Subsidiary is engaged in any material
dispute with any supplier. To the best knowledge of the Seller and the
Subsidiary, no party to any of the Sellers' Contracts is considering
termination, nonrenewal, or any adverse modification of its arrangements with
the Seller or the Subsidiary, and the transactions contemplated by this
Agreement will not have a material adverse affect on the Seller's or the
Subsidiary's relationship with any of the parties to the Sellers' Contracts.
Section 4.10(a) of the Disclosure Schedule sets forth a list of the ten (10)
largest suppliers of the Seller and the Subsidiary during the year ended
December 31, 2001 and the dollar volume of purchases from each listed supplier
during such fiscal year. Section 4.10(b) of the Disclosure Schedule sets forth a
list of all the Seller's and the Subsidiary's customers during the year ended
December 31, 2001 and the dollar volume of sales and services provided to each
customer during such fiscal year.

4.11. Accounts Receivable. Schedule 1.2(b) is an aged list of the
Accounts Receivable of the Seller and of the Subsidiary as of the date hereof.
The Accounts Receivable arose in the ordinary course of business for goods or
services delivered or rendered, constitute only valid, undisputed claims, are
not subject to counterclaims or setoffs, and have been or the Seller reasonably
believes will be collected at their aggregate recorded amounts, in the ordinary
course of business without resort to litigation. Neither the Seller nor the
Subsidiary has received any notice regarding any dispute, action or claim
relating to the collectibility of any accounts or notes receivable or the
acceptability of any goods or services the provision by the Seller or the
Subsidiary of which underlies any accounts or notes receivable. Section 4.11 of
the Disclosure Schedule sets forth a description of any security arrangements
and collateral securing the repayment or other satisfaction of Accounts
Receivable of the Seller and the Subsidiary. All steps necessary to render all
such security arrangements legal, valid, binding and enforceable, and to give
and maintain for the Seller or the Subsidiary, as the case may be, a perfected
security interest in the related collateral, have been taken

4.12. Permits; Compliance with Laws. The Seller and the Subsidiary hold
the governmental licenses, permits, and authorizations listed in Section 4.12 of
the Disclosure Schedule (collectively, the "Permits") which are valid and
unimpaired, will be unaffected by a transfer of all of the Purchased Assets to
the Purchaser, and constitute all of the licenses, permits, and authorizations
required of the Seller and the Subsidiary for the ownership or occupancy of its
properties and assets and the operation of its business. Each Permit listed in
Section 4.12 of the

Disclosure Schedule is transferable, in accordance with the terms of issuance,
by Seller or the Subsidiary, as the case may be, to the Purchaser. The Seller
and the Subsidiary has operated in compliance with all laws and regulations
applicable to it, and all required reports and filings with governmental
authorities have been properly made. Within the past five (5) years, neither the
Seller nor the Subsidiary has entered into any agreement with, had any material
dispute with, or been investigated by any governmental authority or agency,
which agreement, dispute or investigation could restrict the operation of its
business.

4.13. Employees.

(a) Section 4.13 of the Disclosure Schedule contains a list,
as of the date set forth in such Schedule, of the names, office locations, and
compensation of all the Seller's and Subsidiary's full-time employees, part-time
employees and consultants, and a description of the Seller's or the Subsidiary's
vacation and severance pay policies with respect to such employees. Section 4.13
of the Disclosure Schedule also sets forth the accrued vacation for each
employee and describes any severance benefits for and the circumstances under
which each employee is or would be entitled to such severance benefits, as well
as recuperation pay ("d'mei havra'a") balances as required by law, illness pay
balances, fringe benefits including, without limitation, balances in provident
or pension funds, "13th and 14th salary", car, telephone, managers insurance and
any profit sharing commission, incentive or discretionary bonus arrangements to
which the Seller or the Subsidiary is a party.

(b) There have not been any efforts within the last three (3)
years to attempt to organize the Seller's or the Subsidiary's employees, and no
strike or labor dispute involving the Seller or the Subsidiary has occurred
during the last three (3) years or, to the best knowledge of the Seller or the
Subsidiary, is threatened.

(c) No key employee, as designated on Section 4.13 of the
Disclosure Schedule, has indicated that he or she is considering terminating his
or her employment with Seller or the Subsidiary.

(d) The Seller and the Subsidiary has complied with applicable
wage and hour, equal employment, safety, and other material legal requirements
relating to its employees in each jurisdiction in which Seller or the Subsidiary
employs its employees.

(e) Neither the Seller nor the Subsidiary is a party to any
collective labor agreement. Other than as set forth in Section 4.13 of the
Disclosure Schedule, neither the Seller nor the Subsidiary is subject to, nor do
any of its employees benefit from, whether pursuant to applicable employment
laws, regulations, extension orders ("tzavei harchava") or otherwise, any
agreement, arrangement, understanding or custom with respect to employment
(including, without limitation, termination thereof). Other than as expressly
set forth in Section 4.13 of the Disclosure Schedule, neither the Seller nor the
Subsidiary has any prevailing custom with respect to termination of employment.

(f) Except for the employment agreements listed on Section
4.13 of the Disclosure Schedule, there are no agreements between the Seller or
the Subsidiary and any of its directors, officers, executives or employees which
cannot be terminated by the employer upon

three months notice or less without giving rise to a claim for damages or
compensation (except for statutory severance pay).

(g) Other than as set forth in Section 4.13 of the Disclosure
Schedule, there is no outstanding claim or complaint (including, without
limitation, any claim resulting from a bonus arrangement) against the Seller or
the Subsidiary by any person who is now or has been an officer or employee of
such company. Without limiting the generality of the above, there are no unfair
labor practice claims or charges pending, or to the knowledge of the Seller or
the Subsidiary, threatened against the Seller or the Subsidiary, nor to the
knowledge of the Seller or the Subsidiary does any basis exist for any such
claim to be brought. With respect to the employees of the Seller and the
Subsidiary, individually and in the aggregate, no event has occurred and, to the
best knowledge of the Seller or the Subsidiary, there exists no condition or set
of circumstances, in connection with which the Seller or the Subsidiary could be
subject to any liability that is reasonably likely to have a material adverse
effect

(h) The severance pay due to the employees of the Seller and
the Subsidiary is fully funded or provided for in accordance with generally
accepted accounting principles, consistently applied, all liabilities of the
Seller and the Subsidiary in connection with its employees (excluding illness
pay) were adequately accrued in the Recent Balance Sheet (in accordance with
said principles) and, except as set forth in Section 4.13 of the Disclosure
Schedule, neither the Seller nor the Subsidiary is aware of any circumstance
whereby any employee might demand (whether legally entitled to or not) any claim
for compensation on termination of employment beyond the statutory severance pay
to which such employee is entitled.

(i) All amounts which the Seller or the Subsidiary is legally
or contractually required to deduct from their respective employees' salaries or
transfer to such employees' pension or provident, life insurance, disability
insurance, continuing education fund or otherwise, have been duly paid into the
appropriate fund or funds, and the Seller and the Subsidiary have no outstanding
obligation to make any such transfer or provision.

4.14. Employee Benefit Plans. Except as set forth in Section 4.14 of
the Disclosure Schedule:

(a) Neither the Seller nor the Subsidiary is a party to,
maintains, contributes to, is required to contribute to or has or could have any
liability of any nature, whether known or unknown, fixed or contingent, with
respect to, any bonus, incentive, commission, stock or other current or deferred
compensation, separation, retention, severance or similar agreement,
arrangement, plan or policy, or any individual employment, consulting or
personal service agreement (collectively "Compensation Plans"). Each
Compensation Plan has been operated in accordance with its terms and in
compliance with the applicable provisions of all applicable law.

(b) The transactions contemplated herein do not result in the
acceleration of accrual, vesting, funding or payment of any contribution or
benefit under any Compensation Plan.

(c) The Seller and the Subsidiary have delivered to the
Purchaser and Parent true and complete current copies of the following, which
are listed in Section 4.14 of the Disclosure Schedule: (i) all Compensation
Plans (collectively, the "Plans") and related trust agreements.

4.15. Location of Assets. The Seller does not own any assets or
property, or employ any employees, outside the State of Israel. The Subsidiary
does not own any assets or properties, employs any employees, or conducts any
business.

4.16. Insurance. A complete and correct list of all policies of
insurance of any kind or nature covering the Seller, the Subsidiary or the
Purchased Assets, including, without limitation, policies of life, fire, theft,
auto, casualty, product liability, workmen's compensation, business
interruption, employee fidelity, and other casualty and liability insurance,
indicating the type of coverage, name of insured, the insurer, the premium, the
expiration date of each policy and the amount of coverage is contained in
Section 4.16 of the Disclosure Schedule. All such policies, except as
specifically set forth in Section 4.16 of the Disclosure Schedule, (a) are in
full force and effect; (b) are sufficient for compliance with all requirements
of law and of all applicable agreements; (c) are valid, outstanding and
enforceable policies; (d) provide insurance coverage for the assets and
operations of the Seller or the Subsidiary for all risks normally insured
against by persons carrying on the same business as the Seller or the
Subsidiary, except for the deductibles and co-insurance provisions set forth in
the policies; (e) are assignable to the Purchaser with additional premium
payment; and (f) will be maintained in full force and effect by Seller and the
Subsidiary, at their sole cost and expense, until the Closing Date (or
comparable replacement policies will be obtained). Complete and correct copies
of such policies have been furnished to the Purchaser. The Seller and the
Subsidiary shall maintain in full force and effect insurance covering product
liability in such coverage amounts and under such terms as are currently in
effect. Neither the Seller nor the Subsidiary has been denied any insurance
coverage, which has been requested or made any material reduction in the scope
or change in the nature of its insurance coverage. The product liability and
personal injury insurance maintained by the Seller and the Subsidiary has been
on an "occurrence" basis during the six (6) year period prior to the Closing
Date.

4.17. Litigation. Except for claims of less than Fifty Thousand Dollars
($50,000) in which the Seller or the Subsidiary is the plaintiff in an action
for goods or services sold and delivered and in which there is no counterclaim,
Section 4.17 of the Disclosure Schedule contains a complete and correct list of
all actions, suits, proceedings, claims, or governmental investigations pending
and in which Seller or the Subsidiary is a party, or, to the best knowledge of
the Seller and the Subsidiary, threatened against the Seller or the Subsidiary
or any of their assets, or, in connection with its business, or any of the
Seller's or the Subsidiary's officers, directors, or employees. Except as set
forth in Section 4.17 of the Disclosure Schedule, neither the Seller, nor any of
the Seller's officers, directors, or employees is subject or party to any
judgment, order, or other direction of or stipulation with any court or other
governmental authority or tribunal, or in violation of any other Legal
Requirements. Except as set forth in Section 4.17 of the Disclosure Schedule,
neither the Subsidiary nor any of the Subsidiary's officers, directors, or
employees is subject or party to any judgment, order, or other direction of or
stipulation with any court or other governmental authority or tribunal, or in
violation of any other Legal Requirements. Neither the Seller nor the Subsidiary
is aware of any proposed Legal

Requirement that might adversely affect in any material respect the operation
or prospects of its business.

4.18. Transactions with Affiliates. No member or shareholder of the
Seller or of the Subsidiary, nor any person that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Seller, the Subsidiary or any parent, child, sibling or
spouse of any such member or shareholder (collectively, the "Related Persons")
has, any interest in any property, tangible or intangible, used in or pertaining
to its business and which has a value in excess of Ten Thousand Dollars
($10,000). None of the Related Persons, has or owns an equity interest or any
other financial or profit interest in any person or entity which has (a) had
business dealings or a material financial interest in any transaction with the
Seller or the Subsidiary involving more than Five Thousand Dollars ($5,000) or
(b) engaged in competition with the Seller or the Subsidiary in any market
presently served by the Seller or the Subsidiary, except for ownership interests
of less that one percent of the outstanding capital stock of any competing
business which is publicly traded. Section 4.18 of the Disclosure Schedule
reasonably describes the nature and extent of any products, services, or
benefits of a value of more than Ten Thousand Dollars ($10,000) provided to the
Seller or the Subsidiary by any such Related Person and indicates whether there
was a corresponding charge equal to the fair market value of such products,
services or benefits.

4.19. Books and Records. The books and records of the Seller and the
Subsidiary which are in the Seller's possession have been previously made
available to the Purchaser and are true, complete and accurate.

4.20. Improper Payments. Neither the Seller nor its officers and
agents, nor the Subsidiary nor its officers and agents, have made any illegal or
improper payments to, or provided any illegal or improper benefit or inducement
for, any governmental official, supplier, customer, or other person, in an
attempt to influence any such person to take or to refrain from taking any
action relating to the Seller or the Subsidiary. The Seller or the employees of
the Seller, or the Subsidiary or the employees of the Subsidiary, may have made,
from time to time, customary holiday gifts of a value not exceeding One Hundred
Dollars ($100) to suppliers or customers.

4.21. Products and Warranties. Each product manufactured, sold, leased,
or delivered by the Seller or the Subsidiary has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
meets or exceeds the standards required by all laws now in effect, and, to the
knowledge of the Seller or the Subsidiary, there is no pending legislation,
ordinance or regulation, which if adopted, would have a material adverse effect
upon the products sold by the Seller or the Subsidiary. Neither the Seller nor
the Subsidiary has any liability (and there is no basis likely to result in
liability for any present or any future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
liability) for replacement or repair of any product manufactured, sold, leased,
or delivered by the Seller or the Subsidiary or other damages in connection
therewith. Except as set forth in Section 4.21 of the Disclosure Schedule, no
product manufactured, sold, leased, or delivered by the Seller or the Subsidiary
is subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Section 4.21 of the Disclosure
Schedule includes copies of the standard terms and

conditions of sale for products and services sold or delivered in the conduct
of the Seller's or the Subsidiary's business (containing applicable guaranty,
warranty, and indemnity provisions).

4.22. Product Liability, Auto Liability and Workers' Compensation. To
the knowledge of the Seller and the Subsidiary, neither the Seller nor the
Subsidiary has any liability that is not covered by insurance (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against it giving rise to any
liability) arising out of (a) any injury to individuals or property as a result
of the ownership, possession, or use of any product manufactured, sold, leased,
or delivered or service provided by the Seller or the Subsidiary; or (b) any
injury to individuals or property as a result of the ownership or lease by the
Seller or the Subsidiary of any automobile in connection with its business
operations. There are no open workers' compensation claims against the Seller or
the Subsidiary, except for those set forth in Section 4.22 of the Disclosure
Schedule.

4.23. Government Grant Programs. Section 4.23 of the Disclosure
Schedule provides a complete list of all pending and outstanding grants, tax
benefits, incentives and subsidies (collectively, "Grants") from the Government
of the State of Israel or any agency thereof, or from any foreign governmental
or administrative agency, to the Seller or the Subsidiary including, without
limitation, (a) Approved Enterprise Status from the Investment Center and (b)
grants from the Office of the Chief Scientist ("OCS"). The Company has made
available to the Purchaser and the Parent, prior to the date hereof, correct
copies of all applications for Grants submitted by the Company and of all
letters of approval, and supplements thereto, granted to the Seller or the
Subsidiary. Section 4.23 of the Disclosure Schedule details all material
undertakings of the Seller and the Subsidiary given in connection with the
Grants. Without limiting the generality of the above, Section 4.23 of the
Disclosure Schedule includes the aggregate amounts of each Grant, and the
aggregate outstanding obligations thereunder of the Seller and the Subsidiary
with respect to royalties, or the outstanding amounts to be paid by the OCS to
the Seller or the Subsidiary and the composition of such obligations or amount
by the product or product family that it relates to. The Seller and the
Subsidiary are in compliance with the terms and conditions of their respective
Grants and have duly fulfilled all the undertakings relating thereto. The Seller
is not aware of any event or other set of circumstances which might lead to the
revocation or material modification of any of the Grants.

4.24. Accredited Investor. Seller is an accredited investor within the
meaning of Rule 501(a) promulgated under the Securities Act of 1933 (the "1933
Act"). It is acquiring the Parent Securities for its own account and not with
the view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act. Notwithstanding the
foregoing, the Seller intends to distribute the Parent Securities to its
shareholders and certain creditors, subject to applicable law and to the
provisions of the Stockholders Agreement (as defined below). It understands that
the Parent Securities have not been registered under the Securities Act or any
applicable state laws by reason of their issuance or contemplated issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act and such laws, and that the reliance of the Purchaser, Parent
and others upon this exemption is predicated in part upon this representation
and warranty. It further understands that the Parent Securities may not be
transferred or resold without (a) registration under the Securities Act and any
applicable foreign or state securities laws, or (b) an exemption from the
requirements of the Securities Act and any applicable foreign or state
securities laws.

4.25. Legend. Seller understands that the certificates for the Parent
Securities will bear a legend in substantially the following form, in addition
to any other legends that may be required under other documents entered into in
connection with this Agreement:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES ACT OF ANY STATE AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES ACTS OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS PURSUANT TO
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION OR IS IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

4.26. Business Affairs. Seller is aware of the Purchaser's and Parent's
business affairs and financial condition and has acquired sufficient information
about the Purchaser and Parent to reach an informed and knowledgeable decision
to acquire the Parent Securities. Seller recognizes that investment in the
Parent Securities involves a number of significant risks.

4.27. Brokers and Finders. Neither the Seller nor the Subsidiary has
paid or become obliged to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.

4.28. Completeness of Schedules and Exhibits. All Schedules and
Exhibits hereto are complete and accurate. Originals, or true and complete
copies, of all documents requested by the Purchaser or the Parent or other
written materials underlying items listed on the Schedules and Exhibits that
have been requested in writing by the Purchaser or the Parent have been or will
be promptly delivered to the Purchaser or the Parent, and such documents have
not been modified and will not be modified prior to the Closing Date without the
Purchaser's and the Parent's prior written consent.

4.29. Disclosure. No representation, warranty, or other statement by
the Seller or the Subsidiary in this Agreement or in any other of the Sellers'
Documents contains or will contain an untrue statement of a material fact or
omits or will omit to state a material fact necessary to make such statements
not misleading.

5. Representations and Warranties of the Purchaser and Parent. The Purchaser and
the Parent, as the case may be, represent, warrant to, and agree with the Seller
and the Subsidiary that, at and as of the date of this Agreement and at and as
of the Closing Date, the following statements shall be true in all respects. The
representations and warranties set forth below are made jointly and severally.

5.1. Organization and Good Standing. The Purchaser is duly organized
and validly existing under the laws of Israel. The Purchaser is duly qualified,
licensed or admitted to do business and is in good standing in all jurisdictions
in which the ownership, use or leasing of its

Assets and Properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary and in which the failure to be
so qualified, licensed or admitted and in good standing could reasonably be
expected to have an adverse effect on the validity or enforceability of this
Agreement or on the ability of the Purchaser to perform its obligations
hereunder. The Parent Securities have been duly authorized and, upon issuance as
contemplated herein, will be validly issued and free and clear of any liens or
other third-party rights.

5.2. Execution and Effect of Agreement. The Purchaser has the full
right, power, and authority to enter into and perform this Agreement and all
other agreements, certificates and documents executed or delivered, or to be
executed or delivered, by the Purchaser in connection with this Agreement
(collectively, with this Agreement, the "Purchaser's Documents"). The execution,
delivery, and performance by the Purchaser, of the Purchaser's Documents have
been duly authorized by all necessary corporate action of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser and the
Purchaser's Documents are (or when executed and delivered by the Purchaser will
be) legal, valid, and binding obligations of the Purchaser, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights generally and to general principles of equity.

5.3. Restrictions; No Conflicts. The authorization, execution,
delivery, and performance of the Purchaser's Documents and the consummation of
the transactions contemplated by the Purchaser's Documents do not and will not
(a) violate any of the provisions of Purchaser's Organizational Documents, (b)
violate, conflict with, result in a breach of or constitute a default under,
require any notice or consent, which has not been obtained, under, give rise to
a right of termination of, or accelerate the performance required by, any terms
or provisions of any agreement, instrument or writing of any nature to which the
Purchaser is a party or is bound or any of its assets or business is subject, or
(c) violate, conflict with or result in a breach of, or require any notice,
filing or consent under, any statute, rule, regulation or other provision of
law, or any order, judgment or other direction of a court or other tribunal, or
any other governmental requirement, permit, registration, license, or
authorization applicable to the Purchaser.

5.4. Organization and Good Standing of Parent. The Parent is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as presently conducted, and is duly qualified and in good standing to
do business in the States of New Jersey and New York, which constitute all of
the jurisdictions in which the conduct of the Parent's business or its
ownership, leasing or operation of property requires such qualification where
the absence of such qualification would have a material adverse effect on the
Parent.

5.5. Parent's Execution and Effect of Agreement. The Parent has full
legal power and authority to enter into and perform this Agreement. This
Agreement has been duly and validly executed and delivered by the Parent and
constitutes the valid and binding obligation of the Parent, enforceable in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights generally
and to general principles of equity. The Sale Shares, Warrant Shares and
Additional Sale Shares have

been duly authorized, and, when issued, will be duly and validly issued,
fully paid and non-assessable, and free of any liens or encumbrances.

5.6. Disclosure. The registration statements, reports and proxy
statements filed by the Parent with the Securities and Exchange Commission,
including the financial statements contained therein (collectively, the "SEC
Reports"), complied, as of their respective dates, in all material respects with
the requirements of the 1933 Act and the Securities Exchange Act of 1934, as
amended, and did not, as of their respective dates, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading.

5.7. No Material Adverse Change. Except as set forth in Schedule 5.7,
since June 30, 2001, there has been no material adverse change in the financial
condition, results of operations, assets, liabilities or business of the Parent
and its subsidiaries, taken as a whole, other than those generally affecting
persons in the Parent's business, those generally affecting the economy, those
generally affecting the advertising market, and those resulting from changes in
general economic, political or financial conditions, including without
limitation changes occurring as a result of terrorist activities, the effect of
international conditions on the financial markets in the United States, the
suspension of trading in securities generally on the New York Stock Exchange,
the American Stock Exchange and the Nasdaq, and the escalation in hostilities
involving the United States.

5.8. Brokers and Finders. Neither the Purchaser nor Parent has paid or
become obliged to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions provided for in this
Agreement.

6. Covenants of the Seller. The Seller and the Subsidiary covenant and
agree that:

6.1. Access by the Purchaser and the Parent. From the date of this
Agreement through the Closing Date, the Purchaser, the Parent and their
representatives and advisers shall have full and reasonable access, on a
non-interference basis during normal business hours to the Seller's and the
Subsidiary's assets, premises, books and records, employees, accountants,
consultants, attorneys and other representatives involved in each of their
respective businesses, including the other work papers and files of the Seller's
and the Subsidiary's accountants relating to the financials or tax returns of
the Seller and the Subsidiary, and including the right to conduct a full
physical inventory of Seller's and the Subsidiary's assets immediately prior to
the Closing Date, and the Seller and the Subsidiary shall furnish the Purchaser
and the Parent with such information and copies of such documents as the
Purchaser and the Parent may reasonably request; provided, however, that, except
as provided herein, the information requested will not affect or relieve the
Seller or the Subsidiary from any obligation, representation, covenant or
warranty contained in this Agreement, nor affect the Purchaser's or the Parent's
ability to rely on such obligations, representations, covenants or warranties.
The Seller and the Subsidiary shall promptly furnish to the Purchaser and the
Parent all financial statements of the Seller and the Subsidiary that are
prepared in the ordinary course of business. None of the records retained will
be destroyed by the Seller or the Subsidiary without prior written notice to the
Purchaser and the Parent to enable the Purchaser to take possession of or make
copies of such records. As used in this Section 6.1, the right of inspection
includes the right to receive copies.

6.2. Conduct of Business. From the date of this Agreement through the
Closing Date, except as set forth in Schedule 6.2, the Seller's and the
Subsidiary's business shall be conducted only in the ordinary course, consistent
with the Seller's and the Subsidiary's present conduct, and the Seller and the
Subsidiary shall use its best efforts to maintain, preserve, and protect the
assets and goodwill of the Seller and the Subsidiary. From the date of this
Agreement through the Closing Date, except as set forth in Schedule 6.2, the
Seller, and the Subsidiary, will not take or commit to take any of following
actions, except with the prior written consent of the Purchaser and the Parent,
which consent shall not be unreasonably withheld or delayed: (a) repurchase or
redeem any capital interests, pay any dividends or make any distributions or
payments to any owner of any capital interest in any form; (b) except as
specifically contemplated hereby, incur, or perform, pay, or otherwise
discharge, any obligation or liability (absolute or contingent), except for
current obligations and liabilities incurred in the ordinary course of business
consistent with past practice; (c) enter into any employment agreement with,
extend any employee agreements with, become liable for any bonus, profit-sharing
or incentive payment to, or increase the compensation or benefits of, any of its
officers, directors, or employees, except pursuant to presently existing plans,
arrangements, or agreements disclosed in this Agreement or in a Schedule to this
Agreement; (d) sell, transfer, encumber, acquire or otherwise dispose of, or
grant any right with respect to, any properties or assets, tangible or
intangible, other than in the ordinary course of business; (e) make any material
changes in its customary method of operation, including marketing, selling, and
maintaining of business premises, fixtures, furniture, and equipment; (f)
modify, amend, or cancel any of the Sellers' Contracts, or enter into any
contracts, agreements, leases, or understandings other than in the ordinary
course of business or enter into any loan agreements, mortgages or grant any
security interest to any person; (g) alter or revise the accounting principles,
practices or procedures applicable to the Seller or the Subsidiary; (h) bind the
Purchaser in any way which is not in the ordinary course of business or which
could have a material effect on the Purchased Assets or which would constitute a
material breach of the covenants, representations or warranties of either the
Seller or the Subsidiary contained in this Agreement or which would cause such
covenants, representations and warranties not to be true at the Closing, without
the prior written consent of the Purchaser; (i) settle or compromise any
Accounts Receivable of the Seller and the Subsidiary for less than full payment
thereof, without the prior written consent of the Purchaser; or (j) take any
other action which would cause any of the representations and warranties made by
the Seller or the Subsidiary in the Sellers' Documents not to be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date.

6.3. Representations and Warranties. The Seller and the Subsidiary
agree that between the date of this Agreement and the Closing none of them will
take any action which would cause any of the representations and warranties made
by them herein or in the Sellers' Documents not to be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if such representations and warranties had been made on and as of the Closing
Date.

6.4. No Negotiations. From the date of this Agreement until the earlier
of (a) the mutual agreement of the parties to terminate this Agreement in
accordance with Section 14 hereof or (b) February 28, 2002, the Seller and the
Subsidiary shall not, and shall cause each of their respective stockholders,
affiliates, agents, and representatives, and any other person acting

on their respective behalf not to, directly or indirectly solicit, negotiate
with respect to, facilitate, or accept any offers for the purchase of, or sell
or transfer (whether by merger, consolidation, sale of assets or otherwise), any
shares of capital stock of the Seller or the Subsidiary or options or warrants
to purchase any such securities or assets, properties or lines of business of
the Seller or the Subsidiary (an "Acquisition Proposal"). The Seller and the
Subsidiary shall immediately advise the Purchaser and the Parent of the receipt
of any Acquisition Proposal and the terms thereof and shall identify the person
or entity making such Acquisition Proposal and the terms thereof.

6.5. Required Approvals. As promptly as practicable after the date of
this Agreement, Seller and the Subsidiary, as the case may be, shall make all
filings required by the Legal Requirements or as necessary to consummate the
transactions contemplated under this Agreement; and Seller and the Subsidiary
shall use their best efforts to obtain any necessary approvals, consents or
transfers. Seller and the Subsidiary shall cooperate with Purchaser and the
Parent with respect to all filings that Purchaser and the Parent elect or are
required to make. Seller and the Subsidiary shall use their best efforts to
obtain all required third party consents pertaining to the Sellers' Contracts.
The Seller and the Subsidiary will use their best efforts to obtain the
execution of the Stockholders Agreement referred to in Section 8.4 of this
Agreement by those not a party to this Agreement.

6.6. Seller's and Subsidiary's Records. The Purchaser shall have the
right to access and copy the Seller's and Subsidiary's records referenced in
subparts (c), (d), (e) and (f) of Section 1.3 for any reasonable purpose, upon
reasonable notice at reasonable times during normal business hours; and the
Seller and the Subsidiary shall not destroy or otherwise dispose of such records
for a period of seven (7) years following the Closing Date without the prior
written consent of Purchaser.

6.7. Post-Closing Cooperation; Referral of Business. From and after the
Closing, the Seller and the Subsidiary shall cooperate with the Purchaser and
the Parent and take such other actions as the Purchaser or the Parent may
request in order to permit the Purchaser and the Parent to effectively use the
Purchased Assets; provided, however, that Seller and the Subsidiary shall only
be required to do so if they have sufficient personnel available and such
actions can be taken at no material cost to them. Such cooperation and actions
shall include, but not be limited to, advising the Seller's and the Subsidiary's
customers and suppliers that the Purchaser and the Parent have acquired the
Seller's and the Subsidiary's assets and that the Purchaser and the Parent are
engaged in lines of business inclusive of that previously engaged in by Seller
and the Subsidiary; referring prior and potential new customers of the Seller
and the Subsidiary to the Purchaser and the Parent; and providing introductions
to the Seller's or the Subsidiary's contacts arising from the conduct of its
business.

6.8. Change of Name. Forthwith after the Closing, the Seller and the
Subsidiary shall take all steps necessary to change their corporate names to
names which do not include the word "Scidel".

7. Covenants of the Purchaser.

7.1. Representations and Warranties. The Purchaser and the Parent agree
that between the date of this Agreement and the Closing neither of them will
take any action which would cause any of the representations and warranties made
by them in this Agreement or in any of the Purchaser's Documents not to be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date.

7.2. Cooperation and Assistance. The Purchaser shall cooperate with the
Seller in any future audits or investigations conducted by any taxing
authorities or with respect to any claims made against the Seller or the
Subsidiary that relate to actions occurring before the Closing Date, for which
the Seller or the Subsidiary is or may be legally responsible or for which the
Seller is obligated to indemnify the Purchaser or the Parent under this
Agreement. In connection with any such cooperation under this Section 7.2, the
Purchaser or the Parent shall only be entitled to recover from the Seller and
the Subsidiary its out-of-pocket costs incurred, such as for travel and copying
costs, it being understood that neither the Purchaser nor the Parent shall be
entitled to any per diem consulting fees for the time involved of any of their
personnel.

7.3. Purchaser's Records. After the Closing, the Purchaser shall retain
all Business Information purchased and acquired pursuant to this Agreement,
including, without limitation, books, records, ledgers, files, documents,
correspondence, computer discs, reports and similar documents of the Seller and
the Subsidiary with respect to all transactions of the Seller and the Subsidiary
occurring prior to or relating to the Closing, and the historical financial
condition, assets, liabilities, operations and cash flows of the Seller and the
Subsidiary. The Purchaser shall keep such records at its premises, or other
suitable location, and shall make such Business Information available for
inspection by the Seller and the Seller's duly appointed representatives, upon
reasonable notice requesting access to certain specified Business Information at
reasonable times during normal business hours for the following purposes: (a)
when such Business Information relates to Tax Returns previously filed or to be
filed or which are reasonably necessary to substantiate all entries on such Tax
Returns or otherwise reasonably necessary in connection with any audit or other
examination of such Tax Returns; (b) when such Business Information is
reasonably required by the Seller or the Subsidiary to defend against any
liabilities, claims or assessments for which the Seller or the Subsidiary is or
may be legally responsible, or for which the Seller or the Subsidiary is
required to indemnify the Purchaser or the Parent under this Agreement; and (c)
when the Seller can demonstrate a legitimate need for any of the Business
Information. After the Closing Date, the Purchaser will not destroy any of the
Business Information without prior written notice to the Seller to enable the
Seller to take possession of or to make copies of such Business Information
prior to the third anniversary of the Closing Date or for so long as the Seller
and the Subsidiary have any duty of indemnification or liability to the
Purchaser under this Agreement.

8. Conditions Precedent to Obligations of the Purchaser. The obligations of the
Purchaser and the Parent to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing, of each of
the following conditions, any of which may be waived by the Purchaser and the
Parent in writing, and the Seller and the Subsidiary shall use their best
efforts to cause such conditions to be fulfilled:

8.1. Representations and Warranties. Each of the representations and
warranties of the Seller and the Subsidiary in the Sellers' Documents shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date; provided,
however, that the Seller shall be entitled to provide replacements for Schedules
1.2(a), 1.2(b) and 1.3 in order to reflect any changes to the cash position of
the Seller, to the extent that such changes are consistent with the Sellers
obligations under Section 6.2.

8.2. Performance of the Seller. The Seller and the Subsidiary shall
have performed and complied in all material respects with all agreements,
covenants, and conditions required by the Sellers' Documents to be performed or
complied with by them at or before the Closing.

8.3. Delivery of Xxxx of Sale. The Seller and the Subsidiary shall have
delivered to the Purchaser the Xxxx of Sale and the Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit 8.3.

8.4. Stockholders Agreement. The Seller shall have delivered to the
Parent a Stockholders Agreement, in substantially the form attached hereto at
Exhibit 8.4, executed by Seller and all stockholders of Seller pertaining to all
the Sale Shares and the Warrant Shares.

8.5. Opinion of Counsel of the Seller. The Seller shall have delivered
to the Purchaser and Parent an opinion of Xxxxxx, Xxxxx & Co., counsel to the
Seller, dated the Closing Date, in the form attached hereto as Exhibit 8.5.

8.6. Certificate. The Purchaser shall have received a certificate
executed by the Chief Executive Officer and Chief Financial Officer of Seller
and of each of the Subsidiary, dated as of the Closing Date, certifying, in such
detail as the Purchaser may reasonably request, as to the fulfillment of the
conditions set forth in Sections 8.1, 8.2 and 8.9.

8.7. Resolutions. The Purchaser shall have received copies, certified
by the Company's secretary, of resolutions of the Seller's and the Subsidiary'
board of directors and shareholders, authorizing the execution, delivery and
performance of the Agreement and the transactions contemplated hereby by the
Seller and the Subsidiary, and authorizing the signatory officers of the Seller
and the Subsidiary to execute this Agreement.

8.8. Consents. The Seller and the Subsidiary shall have obtained or, to
the reasonable satisfaction of the Purchaser and the Parent, obviated the need
to obtain, all consents, approvals, or waivers from regulatory authorities and
third parties (other than consents, approvals, or waivers required to be
obtained by the Purchaser and the consent of the Investment Center which shall
be subject to the following sentence of this Section 8.8) necessary for the
execution, delivery, and performance of the Sellers' Documents and the
transactions contemplated by the Sellers' Documents, including, without
limitation, (i) the consent of the landlord of all Real Property Leases and (ii)
the consent of the OCS, all without cost or other adverse consequences to the
Purchaser or the Parent. The Seller and the Subsidiary shall have used their
best efforts to obtain or, to the reasonable satisfaction of the Purchaser and
the Parent, obviated the need to obtain, the consent of the Investment Center
necessary for the execution, delivery, and

performance of the Sellers' Documents and the transactions contemplated by the
Sellers' Documents without cost or other adverse consequences to the Purchaser
or the Parent.

8.9. Litigation. No action or proceeding shall be pending or threatened
before any court, tribunal, or governmental body, and no claim or demand shall
have been made against the Seller or the Subsidiary, seeking to restrain or
prohibit or to obtain damages or other relief in connection with the
consummation of the transactions contemplated by the Sellers' Documents, or
which might materially affect the Seller's and the Subsidiary's business, which
in the reasonably exercised opinion of the Purchaser or the Parent makes it
inadvisable to consummate such transactions.

8.10. Release of Liens. The Purchaser and the Parent shall have
received evidence (the "Release Evidence"), reasonably satisfactory to the
Purchase and the Parent, of the termination and release of all pledges, charges,
liens, security interests and other third-party rights affecting the Purchased
Assets.

8.11. Employment Agreements. The Purchaser, the Parent or any
subsidiary of the Parent shall have entered into an employment agreement with
each of the employees listed in Schedule 8.11, on terms and conditions that are
acceptable to the Purchaser, the Parent or any subsidiary of the Parent, and
into employment agreements or other arrangements, on terms and conditions that
are acceptable to the Purchaser, the Parent or any subsidiary of the Parent,
with such employees of Seller or the Subsidiary as the Purchaser or the Parent
deems necessary, in its sole discretion.

8.12 Non-competition Agreement. The Purchaser and the Parent shall have
received a Non-competition Agreement, in substantially the form attached hereto
as Exhibit 8.12, duly executed by the Seller and the Subsidiary.

8.13 Assignment of Patents and Applications. The Purchaser and the
Parent shall have received evidence, reasonably satisfactory to the Purchase and
the Parent, of finalization of the process of exclusively and irrevocably
assigning to the Purchaser, the Parent or any subsidiary of the Parent, of all
rights, including, without limitation, title, interest, ownership and all
subsidiary rights that Scitex Corporation Ltd. may have or acquire in and to
such patents and applications and in such territories as listed in Schedule
1.2(g).

8.14 Release of Escrowed Items. The Purchaser and the Parent shall have
received evidence, reasonably satisfactory to the Purchase and the Parent, of
the termination of the escrow instructions set under the Joint Letter of Escrow
Instructions of each of the Seller and Bank Leumi Le Israel B.M., dated November
23, 1999, and the release of any and all Escrowed Items (as defined therein)
constituting any part of the Purchased Assets, to the Purchaser, the Parent or
any subsidiary of the Parent.

9. Conditions Precedent to Obligations of the Seller and the Subsidiary. The
obligations of the Seller and the Subsidiary to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or before the
Closing, of each of the following conditions, any of which may be waived by the
Seller, on its and the Subsidiary behalf, in writing, and the Purchaser shall
use its best efforts to cause such conditions to be fulfilled:

9.1. Representations and Warranties. The representations and warranties
of the Purchaser in this Agreement and in the Purchaser's Documents shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though the same had been made on and as of the Closing
Date. The representations and warranties of the Parent in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as though the same had been made on and as of the
Closing Date.

9.2. Performance by the Purchaser. The Purchaser shall have performed
and complied in all material respects with the agreements, covenants, and
conditions required by the Purchaser's Documents to be performed or complied
with by it at or before the Closing.

9.3. Assumption of Liabilities; Purchase Price. The Purchaser shall
have delivered an Assignment and Assumption Agreement pertaining to the Assumed
Liabilities under Section 1.4, and the Sale Shares, the Additional Sale Shares,
subject to the retention for the benefit of the Purchaser of the Escrow Shares,
and the Warrant Certificate as provided in Section 2.1.

9.4. Opinion of the Purchaser's and Parent's Counsel. The Purchaser
shall have delivered to the Seller and the Subsidiary opinions of Smith,
Stratton, Wise, Xxxxx & Xxxxxxx and Meitar, Liquornik, Geva & Co. counsel to the
Purchaser and the Parent, dated the Closing Date, in the form attached hereto as
Exhibit 9.4.

9.5. Certificate. The Seller shall have received a certificate executed
by the Purchaser, dated as of the Closing Date, certifying, in such detail as
the Seller may reasonably request, as to the fulfillment of the conditions set
forth in Sections 9.1, 9.2 and 9.8.

9.6. Certified Resolutions. The Seller shall have received copies of
resolutions of the Purchaser and the Parent, certified by the Secretary thereof,
authorizing the execution, delivery and performance of the Agreement and the
transactions contemplated hereby, and authorizing the signatory officers of the
Purchaser and the Parent to execute this Agreement.

9.7. Litigation. No action or proceeding shall be pending or threatened
before any court, tribunal, or governmental body, and no claim or demand shall
have been made against the Purchaser or the Parent seeking to restrain or
prohibit or to obtain damages or other relief in connection with the
consummation of the transactions contemplated herein or in the Purchaser's
Documents, which in the reasonably exercised opinion of the Seller makes it
inadvisable to consummate such transaction.

9.8. Consents. The Purchaser and Parent shall have obtained or, to the
reasonable satisfaction of the Seller obviated the need to obtain, all consents,
approvals or waivers from regulatory authorities and third parties necessary for
the execution, delivery and performance of this Agreement and the Purchaser's
Documents and the transactions contemplated by this Agreement and the
Purchaser's Documents, all without cost to the Seller.

9.9 Stockholders Agreement. The Purchaser and Parent shall have
delivered to the Seller a Stockholders Agreement, in substantially the form
attached hereto at Schedule 8.4, executed by Parent pertaining to all the Sale
Shares, the Warrant Shares and the Additional Sale Shares.

10. Closing Deliveries.

10.1. Deliveries of the Seller and the Subsidiary. At the Closing, the
Seller and the Subsidiary shall deliver or shall cause to be delivered to the
Purchaser the following:

(a) The Xxxx of Sale conveying to the Purchaser the Purchased
Assets free and clear of all claims except as disclosed hereunder, duly executed
by the Seller and the Subsidiary.

(b) The executed opinion ofFisher, Behar & Co., counsel to the
Seller and the Subsidiary, referred to in Section 8.5.

(d) Copies of the consents, approvals, or waivers referred to
in Section 8.8, including, without limitation, (i) the consent of the landlord
of all Real Property Leases, (ii) the consent of the Investment Center, and
(iii) the consent of the OCS.

(e) The Release Evidence, referred to in Section 8.10.

(f) Certified resolutions of the board of directors of the
Seller and the Subsidiary, and their respective shareholders.

(g) An Assignment and Assumption Agreement pertaining to the
Assumed Liabilities, duly executed by the Seller and the Subsidiary.

(h) The Stockholders Agreement, described in Section 8.4
executed by Seller and all stockholders of Seller.

(i) The Non-competition Agreements, described in Section 8.12.

(j) Copy of a certificate of withholding tax exemption of the
Seller from the Israeli Income Tax Authority.

10.2. The Purchaser's Deliveries. At the Closing, the Purchaser shall
deliver or cause to be delivered to the Seller the following:

(a) The Sale Shares, Warrant Certificates and Additional Sale
Shares, subject to the retention of the Escrow Shares.

(b) An Assignment and Assumption Agreement pertaining to the
Assumed Liabilities, duly executed by the Purchaser.

(c) The executed opinions of Smith, Stratton, Wise, Xxxxx &
Xxxxxxx and Meitar, Liquornik, Geva & Co., counsel to the Purchaser, referred to
in Section 9.4.

(d) The certificate referred to in Section 9.5, duly executed
by the Purchaser.

(e) Certified resolutions of the Board of Directors of the
Purchaser and Parent.

(f) Copies of the consents, approvals or waivers referred to
in Section 9.8.

(g) The Stockholders Agreement, described in Section 8.4
executed by Parent.

10.3. Dismissal of Patent Litigation. At the Closing, the Parent and
the Seller will execute a stipulation of voluntary dismissal in the form
attached as Schedule 10.3 hereto pursuant to Rule 41(a)(1) of the Federal Rules
of Civil Procedure with respect to all claims and counterclaims in the matter
captioned Princeton Video Image, Inc. v. Scidel USA Ltd., C.A. No. 99-386-SLR,
pending in the District of Delaware. The Parent agrees to file this stipulation
with the Court promptly after the Closing, but in no event later than fifteen
days after the Closing.

11. Restrictive Covenant. The Seller and the Subsidiary will enter into a
Non-competition Agreement, in form and substance acceptable to the Purchaser,
the Parent and their counsel, which shall restrict the Seller's, the
Subsidiary's and their affiliates right, ability and authority to enter into,
conduct or engage in a business, work, manufacturing, consulting or other area
in which Purchaser, the Parent, or any subsidiary of either of them, are
currently engaged or contemplate engaging in. The Non-competition Agreement
shall include as parties thereto the Seller and the Subsidiary. The Seller and
the Subsidiary will use their best efforts to obtain the execution of the
Non-competition Agreement by those not a party to this Agreement.

12. The Seller's and Subsidiary's Employees and Employee Benefits.

12.1. Employment. The Purchaser, the Parent, or any subsidiary of the
Parent, in their sole discretion, may offer employment to any, or all, of the
current employees of the Seller, or the Subsidiary, at such salary and benefit
levels, and on such other terms, as the Purchaser, the Parent, or any subsidiary
of the Parent shall determine. Such offer of employment will require each
employee of the Seller or the Subsidiary to sign a non-competition, invention
assignment and confidentiality agreement, in form and substance satisfactory to
Purchaser, the Parent, or any subsidiary of the Parent, as the case may be, in
their sole discretion, prior to commencing employment with the Purchaser, the
Parent, or any subsidiary of the Parent, as the case may be. Any offer of
employment will also require each employee of the Seller or the Subsidiary, as a
condition of employment by the Purchaser, the Parent, or any subsidiary of the
Parent, as the case may be, to sign a waiver of such employee's entitlement,
right or claim to severance benefits from Seller or the Subsidiary under any
agreement, contract, law or regulation. The Seller's and the Subsidiary's
employees who accept employment with the Purchaser, Parent or any subsidiary of
Parent upon the Closing shall be designated as the "Transferred Employees."

12.2. Severance Benefits. None of the Purchaser, Parent or any
subsidiary of Parent shall have any obligation to make severance payments to any
of the Seller's or the Subsidiary's employee by virtue of the employee's
termination of employment with or by the Seller or the Subsidiary prior to or as
of the Closing or as a result of the Closing. For any Transferred Employees
terminated subsequent to the Closing by the Purchaser, Parent or any subsidiary
of Parent, such terminated Transferred Employee shall be entitled to severance
benefits to which he or she was entitled under the terms and conditions of his
or her employment with Seller or the Subsidiary, but only insofar as such
severance benefits are set forth on Schedule 4.13 of the Disclosure Schedule.
Subject to the Transferred Employees' consent, the Seller and the

Subsidiary shall transfer to the Purchaser, Parent or any subsidiary of Parent
any and all amounts accrued for the benefit of any Transferred Employee, as part
of the severance benefits to which he or she was entitled under the terms and
conditions of his or her employment with Seller or the Subsidiary, as more fully
set forth on Schedule 4.13. For all other Transferred Employees, entitlement to
severance benefits shall be governed by the requirements of applicable law and
regulation or as specifically provided for in any benefit plans adopted by the
Purchaser, Parent or any subsidiary of Parent and specifically made applicable
to employees hired by the Purchaser, Parent or any subsidiary of Parent.
Notwithstanding the foregoing, the Seller shall reimburse the Purchaser for any
severance expenses, including payments in respect of notice periods prior to
termination, incurred by the Purchaser in connection with any Transferred
Employees who cease to be employed by the Purchaser, for any reason, within 90
days following the Closing; such reimbursement may be paid in cash or by return
of a portion of the Sale Shares.

12.3. Credit for Accrued Vacation. The Purchaser, Parent or any
subsidiary of Parent hiring the Transferred Employees shall provide such
Transferred Employees with credit for accrued vacation as set forth on Schedule
4.13 of the Disclosure Schedule.

12.4. The Seller's and Subsidiary's Employment Agreements. The
Purchaser shall not have any responsibility or liability under any individual
written agreement between the Seller or the Subsidiary and any of the Seller's
or the Subsidiary's employees setting forth specific terms of employment
duration or compensation, including, without limitation, any termination
agreement.

12.5. No Rights to Employment. Nothing expressed or implied in this
Agreement shall confer upon any of the Seller's or the Subsidiary's employees,
beneficiaries, dependents, legal representatives or collective bargaining agents
of any such employee any right or remedy of any nature or kind whatsoever under
or by reason of this Agreement, including, without limitation, any right to
employment or to continued employment for any specified period, at any specified
location or under any specified job category.

13. Indemnification.

13.1. Indemnification by the Seller and the Subsidiary. The Seller and
the Subsidiary shall, jointly and severally, indemnify, defend, and hold
harmless the Purchaser, Parent, subsidiaries of the Parent and their affiliates,
promptly upon demand at any time and from time to time, against any and all
direct losses, liabilities, claims, actions, damages, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements (collectively,
"Losses"), arising out of or in connection with any of the following: (a) any
misrepresentation or breach of any warranty made by the Seller or the Subsidiary
in any of the Sellers' Documents; (b) the Retained Liabilities; (c) any breach
or nonfulfillment of any covenant or agreement made by the Seller or the
Subsidiary in any of the Sellers' Documents; (d) any demand of payment brought
by suppliers of the Seller and the Subsidiary listed under Section 4.10(a),
arising from the operation of the Seller's or the Subsidiary's business during
any period or periods on or prior to the Closing Date, which were not resolved
by the Seller and the Subsidiary, and (e) any claim by any taxing authority for
taxes, interest, penalties, fees, assessments, duties and other similar
governmental charges which arise from the operation of its business by the
Seller or the Subsidiary during any period or periods on or prior to the Closing
Date.

13.2. Indemnification by the Purchaser. The Purchaser shall indemnify,
defend, and hold harmless the Seller and the Subsidiary, promptly upon demand at
any time and from time to time, against any and all Losses arising out of or in
connection with any of the following: (a) any misrepresentation or breach of any
warranty made by the Purchaser or Parent in any of the Purchaser's Documents;
(b) any breach or nonfulfillment of any covenant or agreement made by the
Purchaser in the Purchaser's Documents; (c) any failure to pay the Assumed
Liabilities or other liabilities expressly assumed by the Purchaser hereunder;
and (d) any liabilities or obligations of, or claims or causes of action against
the Seller or the Subsidiary which arise from the use of the Purchased Assets by
the Purchaser during any period or periods after the Closing Date.

13.3. Further Provisions Regarding Indemnification.

(a) Survival. Notwithstanding any examination or investigation
made by or for any party, all representations, warranties, indemnities,
covenants, and agreements made by the Seller and the Subsidiary in the Sellers'
Documents, and made by the Purchaser and Parent in the Purchaser's Documents,
shall survive the Closing for a period of two years.

(b) Limitations. Notwithstanding the foregoing, neither the
Seller and the Subsidiary on the one hand, nor the Purchaser and Parent on the
other (the Seller and the Subsidiary on the one hand, and the Purchaser and
Parent on the other, being referred to in this Section 13 as a "Party"), shall
be entitled to indemnification for Losses arising out of matters referred to in
Sections 13.1 or 13.2, as applicable:

(i) unless it shall have given written notice to the
other Party, setting forth its claim for indemnification in reasonable detail,
within two (2) years after the Closing Date; provided, however, that the
foregoing limitation shall not apply with respect to a breach of the
representations and warranties of title contained in Section 4.8 (with respect
to which no time limit for indemnification of claims shall exist), and with
respect to breaches of the representations and warranties contained in Section
4.7 (with respect to which such notice shall be given at any time prior to the
expiration of the last applicable statute of limitations relating to the tax
liability discussed therein); and

(ii) no claim for indemnification shall be made until
the aggregate sustained Losses incurred by the party seeking indemnification
exceed Twenty-five Thousand Dollars ($25,000), in which case such party shall be
entitled to indemnification for all Losses and no claim for indemnification and
costs under (c) below shall exceed the aggregate amount of the Escrow Shares
being held by the Escrow Agent pursuant to Section 2.1 hereof.

(c) Defense. If the matter with respect to which a Party seeks
indemnification (the "Indemnitee") involves a claim asserted against the
Indemnitee by a third party, promptly after receipt by the Indemnitee of notice
of the commencement of any action, it will notify the other Party (the
"Indemnitor") in writing of the commencement thereof but the omission so to
notify the Indemnitor will not relieve the Indemnitor from any liability which
it may have to the Indemnitee unless the Indemnitor is prejudiced by such
omission. In case any such action shall be brought against the Indemnitee and it
shall notify the Indemnitor of the commencement thereof, the Indemnitor shall be
entitled to participate in, and, to the extent that it may wish to

assume the defense thereof, with counsel satisfactory to the Indemnitee, and
after notice from the Indemnitor to the Indemnitee of its election to assume the
defense thereof, the Indemnitor shall not be liable to the Indemnitee for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof unless (i) the Indemnitee shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to this sentence, (ii) the Indemnitor shall not have employed
counsel reasonably satisfactory to the Indemnitee to represent the Indemnitee
within a reasonable time, (iii) the Indemnitor and its counsel do not actively
and vigorously pursue the defense of such action, or (iv) the Indemnitor has
authorized the employment of counsel for the Indemnitee at the expense of the
Indemnitor; provided, however, that the Indemnitee shall have the right to
employ counsel to represent it if, in its reasonable judgment, it is advisable
for it to be represented by separate counsel because separate defenses are
available, or because a conflict of interest exists between the Indemnitee and
the Indemnitor in respect to such claim, and in such event the fees and expenses
of such separate counsel shall be paid by the Indemnitor. In such circumstance,
the Indemnitee shall designate the counsel. The Indemnitor will not be liable to
the Indemnitee for any settlement of any action or claim without the consent of
the Indemnitor and the Indemnitor may not unreasonably withhold its consent to
any settlement. The Indemnitor will not consent to entry of any judgment or
enter into any settlement or compromise any claim which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnitee of a full release from all liability with respect to such claim or
litigation.

14. Termination.

14.1. Termination Events. This Agreement may, by notice given on or
before the Closing Date, in the manner hereinafter provided, be terminated and
abandoned:

(a) Material Default. By the Purchaser and Parent or the
Seller and the Subsidiary if any other party materially defaults or breaches the
Agreement with respect to the due and timely performance of any of such other
party's covenants and agreements contained herein, or with respect to due
compliance with any of such other party's representations and warranties
contained herein.

(b) Conditions Not Met. By the Purchaser or Parent if all of
the conditions set forth in Section 8 shall not have been satisfied (or are
incapable of being satisfied) on or before Closing or waived by the Purchaser or
Parent on or before such date; or by the Seller and the Subsidiary if all of the
conditions set forth in Section 9 shall not have been satisfied (or are
incapable of being satisfied) by Closing or waived by the Seller on or before
such date.

(d) Closing Not Occurred. By the Purchaser and the Parent or
the Seller and the Subsidiary if the Closing shall not have occurred, through no
fault of either party, on or before June 27, 2002 or such later date as may be
agreed upon by the parties.

14.2. Effect of Termination. Each party's right of termination
hereunder is in addition to any other rights it may have hereunder or otherwise.
If this Agreement is rightfully terminated

pursuant to this Section 14, all further obligations of the parties hereunder
shall terminate, except as otherwise provided herein.

14.3. Confidentiality. The Confidential Disclosure Agreements
previously entered into between the parties shall remain in effect
notwithstanding the termination of this Agreement for any reason or any
provision of this Agreement to the contrary. No party hereto shall issue any
press release or make any public statement or disclosure with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the other parties hereto; provided, however, that if a party hereto
reasonably determines, based upon the advice of counsel, that a public statement
or disclosure regarding this Agreement is required by law, such party may make
such public statement or disclosure, provided that such party shall first give
the other parties an opportunity to review and comment on such proposed
statement or disclosure.

15. Miscellaneous.

15.1. Notices. All notices or other communications in connection with
this Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent via commercial courier or telecopier,
directed, as follows:

If to the Seller:

SciDel Technologies, Ltd.

Facsimile:
-------------------------
Attention:
-------------------------

If to the Subsidiary:

Facsimile:
------------------------
Attention:
-------------------------

With copies to:

Fischer, Behar, Chen & Co.
3 Xxxxxx Xxxxxx Xx.
Xxx Xxxx 00000 Xxxxxx
Facsimile: 972-3-609-1117
Attention: Xxxxxx Xxxxx, Adv.

If to the Purchaser:

Adco Imaging Ltd.
C/o Princeton Video Image, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000

If to the Parent:

Princeton Video Image, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000

With copies to copy (which shall not constitute notice) to:

Smith, Stratton, Wise, Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.

Meitar, Liquornik, Geva & Co.
16 Abba Hillel Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxx Xxx 00000
Israel
Facsimile: 972-3-670-3111
Attn: Xxxxxxxx X.X. Xxxxx, Esq.

15.2. Dispute Resolution. In the event of any dispute relating to this
Agreement, the parties to the dispute shall first use their reasonable best
efforts to resolve the dispute amicably. If, after twenty (20) days, the parties
have been unable to resolve the dispute, any party may submit the matter to
arbitration, which shall be the sole method of dispute resolution in connection
with this Agreement and the transactions contemplated hereby. Any arbitration
shall be conducted in accordance with the Arbitration Rules of the International
Chamber of Commerce. Each of Purchaser and Seller shall nominate one member to
the arbitration panel; the nominees shall thereafter appoint a third panel
member. In the event the Purchaser's and Seller's nominees unable to appoint a
third member within twenty (20) days of the date of the last nominee to be
appointed, the American Arbitration Association shall select the third panel
member. Any decision of the arbitrators shall be final, binding and
nonappealable by the parties. The parties agree that the arbitrators shall be
authorized to award costs and fees to a prevailing party, but shall not be
authorized to award exemplary damages in any form. Any arbitration initiated
pursuant hereto shall be conducted in London, England.

15.3. Entire Agreement; Modification and Waiver. This Agreement (which
includes the Schedules and Exhibits) sets forth the parties' final and entire
agreement with respect to its subject matter and supersedes any and all prior
understandings and agreements, whether written or oral. This Agreement can be
amended, supplemented, or changed, and any provision of this

Agreement can be waived, released, discharged or abandoned only by a written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, change, or waiver is
sought. The failure of any party to enforce at any time any of the provisions of
this Agreement shall in no way be construed to waive any such provision, nor in
any way to affect the validity of this Agreement or any part thereof or the
right of any party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to be a waiver of any other
or subsequent breach.

15.4. Successors. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, executors,
administrators, personal representatives, successors, and assigns; provided,
however, that neither this Agreement nor any right or obligation under this
Agreement may be assigned or transferred, except that the Purchaser may assign
this Agreement and its rights under this Agreement, in whole or in part, to the
Parent or any direct or indirect wholly-owned subsidiary of the Purchaser or
Parent; and provided further that the Purchaser may designate any direct or
indirect wholly-owned subsidiary of the Purchaser or Parent to purchase all or
any part of the Purchased Assets or to assume all or any part of the Assumed
Liabilities.

15.5. Section Headings. The Section headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

15.6. Fees and Expenses; Sales Taxes; VAT. Whether or not the
transactions contemplated by this Agreement are consummated, the parties shall
pay their own respective expenses, except as otherwise provided herein. The
Seller and the Subsidiary shall pay any transfer, sale, purchase, use or similar
taxes under the laws of any nation, state, county, city, or political
subdivision thereof, payable as a result of the transactions contemplated
hereby. To the extent to which any payment which shall be made according to the
provisions of this Agreement is subject to VAT, VAT at the applicable rate shall
be added to the amount stated in this Agreement, and the payment shall be made
in accordance with a duly prepared tax invoice However, if the consent of the
Director of Customs and Value Added Tax (the "Director"), under Section 20 of
the Israeli VAT Law, is obtained, allowing the Purchaser to be liable for
payments of VAT arising from this Agreement, the Purchaser will be entitled to
issue a self-invoice instead of the Seller. The Seller and the Subsidiary will
co-operate with the Parent and the Purchaser in obtaining such consent of the
Director.

15.7. Severability. If any provision of this Agreement shall be held by
any court of competent jurisdiction to be illegal, invalid, or unenforceable,
such provision shall be construed and enforced as if it had been more narrowly
drawn so as not to be illegal, invalid, or unenforceable, and such illegality,
invalidity, or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.

15.8. Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the internal law of Israel (without reference
to its rules as to conflicts of law)

15.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

SIGNATURE PAGE FOLLOWS

*******

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

THE PURCHASER: Adco Imaging Ltd.

By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx

Title: Director
-------------------------------

THE PARENT Princeton Video Image, Inc.

By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx

Title: Co-Ceo
--------------------------------

THE SELLER: SciDel Technologies, Inc.

By: /s/ Shinuel Zahari
-----------------------------------
Name: Shinuel Zahari

Title: CEO
--------------------------------

THE SUBSIDIARY: SciDel USA Ltd.

By: /s/ Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx

Title: President
--------------------------------

THE SCHEDULES AND EXHIBITS TO THIS DOCUMENT (WHICH ARE LISTED ON THE TABLE OF
CONTENTS INCLUDED IN THIS DOCUMENT) HAVE BEEN OMITTED PURSUANT TO REGULATION
S-K, ITEM 601(b)(2). THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY
OF THE OMITTED SCHEDULES AND EXHIBITS TO THE SECURITIES AND EXCHANGE COMMISSION
UPON REQUEST.

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