ASSET PURCHASE AGREEMENT

Sellers desire to sell, and Buyer desires to purchase, substantially all of the ownership right, title and interest in and to the intellectual property rights pertaining to the digital computer pen and digitizer segment of the Sellers’ business, including without limitation the human interface device technology used in the Magic Point Pen and the Write Sense products.

On the date hereof, Buyer and Sellers are entering into the Loan Agreement pursuant to which Buyer is lending $1,900,000 to Sellers, of which amount (a) $350,000 is being disbursed to Sellers on the date hereof and (b) $1,550,000 is being deposited in the Certificate of Deposit (as defined in the Loan Agreement) on the date hereof.

In consideration of the above premise and of the mutual promises and covenants contained in this Agreement, the Parties agree as follows:

1.1.1      All Assigned Technology, including without limitation all such items listed on Schedule 1.1.1 ; all such items acquired by Sellers or coming into existence after the date hereof and on or before the Closing Date owned by Sellers and/or used by Sellers in the Business;

1.1.2      All of Sellers’ rights under the Assigned Contracts listed in Schedule 1.1.2 , but not other contracts;

1.1.3      All Promotional Materials;

1.1.4      All equipment, materials, supplies, inventory, tooling, and spare and replacement items therefor, including without limitation all such items listed on Schedule 1.1.4 and all such items acquired by Sellers after the date hereof and on or before the Closing Date, other than to the extent inventory is disposed of by Sellers prior to the Closing Date in the ordinary course of business;

1.1.5      All licenses granted by or to Sellers and all other agreements to which Sellers are a party that relate, in whole or in part, to any items described in Section 1.1.1 or to other proprietary rights transferred hereby, including without limitation all items listed on Schedule 1.1.5 and all such items granted to or entered into by Sellers after the date hereof and on or before the Closing Date;

1.1.6      To the extent transferable, all approvals, authorizations, certificates, consents, licenses, permits, franchises, tariffs, variances, orders and other registrations of any federal, state or local court or other governmental department, commission, board, bureau, agency or instrumentality held by Sellers and required for the use of the Assets, including without limitation all such items listed on Schedule 1.1.6 and all such items granted or received after the date hereof and on or before the Closing Date;

1.1.7      All prepaid and deferred items of Sellers relating to the Assets, including prepaid license fees;

1.1.8      All engineering, research and development, and other similar documents, specifications and records, and all studies, reports, summaries and other similar documents and materials related to the Assets;

1.1.9      All internet web sites and internet domain names used in the conduct of the Business, including without limitation those listed on Schedule 1.1.9 ; and

1.1.10    All right, title and interest in and to Trademarks and all goodwill pertaining to such Trademarks associated with the Business.

1.2          Excluded Assets .  Any assets other than the Assets specified in Section 1.1 are “ Excluded Assets ” and are not being purchased by Buyer.

1.3          Assumption of Liabilities .  Buyer will not assume and will not be liable for any Retained Liabilities, and the Assets shall be free of all liabilities, obligations and Liens.  Without limiting the generality of the foregoing, Buyer will not be responsible for any of the following:

1.3.1      liabilities, obligations or debts of Sellers, whether fixed, contingent or mixed and whether based on events occurring before or after the Closing, including without limitation those based on tort, contract, statutory or other claims or involving fines or penalties payable to any governmental authority;

1.3.2      liabilities, obligations or debts of Sellers for any federal, state, local, foreign, or other tax, including without limitation income, gross receipts, franchise, license, sales and use, transfer, value added, customs, duties, real property, personal property, capital stock, social security, employment, unemployment, disability, payroll, withholding or other tax, including all associated interest, penalties and additions (“ Taxes ”);

1.3.3      liabilities or obligations of Sellers to employees for salaries, bonuses or health and welfare benefits or with respect to any profit sharing, stock bonus, pension, retirement, stock purchase, option, bonus or deferred compensation plan or for any other benefits or compensation (including without limitation accrued vacation);

1.3.4      liabilities or obligations of Sellers for employee severance payments or arrangements resulting from termination of Sellers’ employees;

1.3.5      liabilities or obligations of Sellers relating to issuances of securities; and

1.3.6      liabilities or obligations of Sellers under any Environmental Law.

1.4          Purchase Price .  The purchase price for the Assets (the “Purchase Price” ) shall be $2,000,000, of which $100,000 was previously paid by Buyer in connection with the Letter of Intent signed by the parties and dated April 2, 2009.  At Closing, Buyer shall forgive Sellers’ Obligations (as defined in the Loan Agreement) under the Loan Agreement, release the Lien of the Loan Agreement and cause the bank holding the Certificate of Deposit (as defined in the Loan Agreement) to disburse funds from the Certificate of Deposit to the Persons and in the amounts set forth on Schedule 1.4 .

1.5          Allocation of Purchase Price .  The Purchase Price shall be allocated among the Assets in accordance with their relative fair market values.

1.6          Instruments of Conveyance and Transfer .  The sale, conveyance, assignment, transfer and delivery of the Assets shall be effected by Sellers’ execution and delivery to Buyer, on the Closing Date, of the Assignment and Bill of Sale (attached hereto as Exhibit A ), the Patent Assignments (a form of which is attached hereto as Exhibit B ), the Trademark Assignments (a form of which is attached hereto as Exhibit D ) and the Copyright Assignment (a form of which is attached hereto as Exhibit E ), together with such other general bills of sale, endorsements, assignments and other instruments of transfer and conveyance, in form and substance sufficient to vest in Buyer all right, title and interest in and to the Assets, as reasonably requested by Buyer or its counsel.

1.7          Further Assurances .  Sellers agrees that, at any time and from time to time on and after the Closing Date, it will, upon the request of Buyer and without further consideration, take all steps reasonably necessary to place Buyer in possession and operating control of the Assets, and Sellers will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all further acts, deeds, assignments, conveyances, transfers, powers of attorney or assurances as reasonably required to sell, assign, convey, transfer, grant, assure and confirm to Buyer, or to aid and assist in the collection of or reducing to possession by Buyer of, all of the Assets, or to vest in Buyer good, valid and marketable title to the Assets.

1.8          Closing .  The Closing shall take place at the offices of Stoel Rives LLP, Portland, Oregon, at 8:00 a.m., Portland time, on the date that is three business days after the date that all conditions to the Closing are satisfied (other than those conditions that by their terms are to occur at the Closing) or at another date, time and place agreed upon in writing by the parties (the “ Closing Date ”).

1.9           Transfer Taxes .  Sellers shall be responsible for and shall pay all federal, state, local, foreign, and other sales, documentary, recording, transfer and other similar taxes or charges arising in connection with the transactions contemplated by this Agreement (collectively, “ Transfer Taxes ”).  Sellers shall promptly file all necessary Transfer Tax returns and pay all Transfer Taxes due.

Buyer represents and warrants to Sellers as follows as of the date of this Agreement and as of the Closing Date:

2.1          Authorization .  Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted.  Buyer has taken all corporate action necessary to authorize its execution, delivery and performance of this Agreement.  Buyer has full corporate power and authority to enter into this Agreement and carry out the terms hereof.  Buyer has duly executed and delivered this Agreement, and this Agreement is its valid and binding obligation enforceable in accordance with its terms, except as enforceability may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to creditors’ rights generally or by the availability of equitable remedies.

2.2          Compliance .  The execution, delivery and performance of this Agreement by Buyer, the compliance by Buyer with the provisions of this Agreement and the consummation of the transactions described in this Agreement will not conflict with or result in the breach of any of the terms or provisions of or constitute a default under:

2.2.1      the organizational documents of Buyer;

2.2.2      any note, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which Buyer is a party or by which Buyer is bound; or

2.2.3      any statute or any order, rule, regulation or decision of any court or regulatory authority or governmental body applicable to Buyer.

2.3          Consents .  Except as set forth in Schedule 2.3 , no consent, approval, authorization, order, designation or declaration of any court or regulatory authority or governmental body, federal or other, or third person is required to be obtained by Buyer nor is any filing or registration required to be made therewith by Buyer for the consummation of the transactions described in this Agreement.

2.4          Brokers and Finders .  Neither Buyer nor any officer, director or employee of Buyer has employed any broker, finder or investment banker or incurred any liability for any commission, brokerage or investment banking fee or finder’s fee in connection with the transactions contemplated by this Agreement.

2.5          Financing .  Buyer has, and at the Closing will have, sufficient internal funds (without giving effect to any unfunded financing regardless of whether any such financing is committed) available to pay the Purchase Price.

2.6          Creditors.   In completing the transactions contemplated by this Agreement, Buyer does not intend to hinder, delay or defraud any creditor of Sellers.

To induce Buyer to enter into and perform this Agreement, and except as is otherwise set forth in Schedule 3 (the “ Disclosure Schedule ”), which shall constitute modifications to those representations and warranties under this Article 3, each Seller, jointly and severally, represents and warrants to Buyer as of the date of this Agreement and as of the Closing Date as follows, it being agreed that disclosure of a specific item in any one Section of the Disclosure Schedule shall also be deemed a disclosure as to all other applicable Sections of the Disclosure Schedule if either (x) there is an explicit cross-reference in that Section of the Disclosure Schedule to another Section or Sections of the Disclosure Schedule, or (y) Buyer could reasonably be expected to ascertain the scope of the modification to another representation that expressly references the Disclosure Schedule, notwithstanding the absence of a cross-reference in the Disclosure Schedule.

3.1         Corporate Existence.

3.1.1      InPlay is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and it has all necessary corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted.  InPlay is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

3.1.2      FinePoint is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and it has all necessary corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted.  FinePoint is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

3.2          Authority.

3.2.1      InPlay has the corporate power and authority to enter into this Agreement and to carry out its terms.  Except for the required vote of its stockholders, InPlay has taken all corporate action necessary to authorize the execution, delivery and performance of this Agreement.  InPlay has duly executed and delivered this Agreement, and this Agreement is binding upon and enforceable against InPlay in accordance with its terms, except as enforceability may be limited or affected by applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the rights of creditors and except as enforceability may be limited by rules of law governing specific performance, injunctive relief or other equitable remedies.

3.2.2      FinePoint has full corporate power and authority to enter into this Agreement and to carry out its terms.  FinePoint has taken all corporate action necessary to authorize the execution, delivery and performance of this Agreement.  This Agreement has been duly and validly executed and delivered by FinePoint, and is binding upon and enforceable against FinePoint in accordance with its terms, except as enforceability may be limited or affected by applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the rights of creditors and except as enforceability may be limited by rules of law governing specific performance, injunctive relief or other equitable remedies.

3.3          No Adverse Consequences .  Neither the execution and delivery of this Agreement by Sellers nor the Closing will

3.3.1      other than the Lien created by the Loan Agreement, result in the creation or imposition of any Lien on any of the Assets;

3.3.2      violate or conflict with any provision of Sellers’ articles of incorporation or bylaws;

3.3.3     violate any law, judgment, order, injunction, decree, rule, regulation, ruling or other restriction of any governmental authority applicable to Sellers or any Affiliate of Sellers; or

3.3.4     either alone or with the giving of notice or the passage of time or both, conflict with; constitute grounds for termination, cancellation, modification or acceleration of; result in the breach of the terms, conditions or provisions of; require notice under, result in the loss of any benefit to Sellers under or constitute a default under any agreement, instrument, license, permit or other arrangement to which Sellers are a party or by which it is bound.

3.4          Brokers and Finders .  Neither Sellers nor any affiliate of Sellers have employed any broker, finder or agent or dealt with anyone purporting to act in such capacity or agreed to pay any brokerage fee, finder’s fee or commission with respect to the transaction contemplated by this Agreement for which the Buyer could become liable or obligated.

3.5          Litigation .  Except as set forth on Schedule 3.5 (i) none of Sellers or any Affiliate of Sellers are subject to any outstanding injunction, judgment, order, decree, ruling or charge and (ii) there is no claim, litigation, proceeding or investigation of any kind pending or threatened by or against Sellers or any Affiliate of Sellers and, to the knowledge of Sellers, there is no basis for any such claim, litigation, proceeding or investigation.  None of the claims, litigation, proceedings or investigations set forth on Schedule 3.5 could result in any Material Adverse Change in the Assets or result in a Lien on the Assets.

3.6          Intellectual Property .  Except as set forth in Schedule 3.6 :

3.6.1     To Sellers’ knowledge, there are no claims or demands pending by any other person pertaining to any of the Assigned Technology nor has a claim or demand been made to Sellers that challenge Sellers’ ownership or use of the Assigned Technology.

3.6.2     With respect to Assigned Technology that is owned by Sellers, all such Assigned Technology is owned free and clear of all Liens other than (a) the Lien created by the Loan Agreement and (b) Liens on the property or assets of FinePoint in favor of InPlay, the Uniform Commercial Code financing statements relating to which have been assigned to Buyer.  All issued Patents and pending applications, registered Trademarks and pending applications, and registered or material unregistered Copyrights owned by Sellers are listed in Schedule 3.6.2 .  All registered or issued IP Rights have been duly registered in, filed in or issued by the U.S. Patent and Trademark Office, the U.S. Copyrights Office or the corresponding governmental offices of other jurisdictions as identified in Schedule 3.6.2 , have been properly maintained and renewed in accordance with all applicable provisions of Law and administrative regulations of the United States or each such jurisdiction except as listed in Schedule 3.6.2 , and no actions are required within thirty (30) days from the Closing in order to maintain the existing status.

3.6.3     All Third Party Licenses (including all open source licenses) used in the development and distribution of Sellers’ products are listed on Schedule 3.6.3 .  The use of such Third Party Licenses in the development and distribution of Sellers’ products imposed no obligation on Sellers to disclose any source code or trade secrets of Sellers to any other person, and Sellers have not disclosed any such source code to another person except for persons under obligation to provide development services to Sellers.

3.6.4     Except for Third Party Licenses listed in Schedule 3.6.3 and except as otherwise listed on Schedule 3.6.4 , to Sellers knowledge there are no patent rights or other intellectual property rights of Third Parties needed to use Sellers’ IP Rights and Technology for the products developed or distributed by Sellers to the date of this Agreement.

3.6.5     Sellers have taken all measures required to establish and preserve the IP Rights developed by, or on behalf of, Sellers.  Sellers have obtained written assignments from the named inventors of the patents and patent applications listed in Schedule 3.6.5 and, except for such named inventors, no other person or entity employed, including as a consultant, by Sellers has any right or claim with respect to the Assigned Technology.  All current executives and all current consultants and independent contractors hired by Sellers have agreed to maintain the confidentiality of all confidential and proprietary information of Sellers and of any information of third parties received by Sellers under an obligation of confidentiality.

3.6.6     To Sellers’ knowledge, Sellers have not infringed, do not infringe and, by using the Assigned Technology, will not infringe or unlawfully or wrongfully use the IP Rights of any third person.  No claims have been made or proceedings initiated that charge Sellers with infringement of any IP Rights of any third person, and no such claim or proceeding is pending or is likely to be filed against Sellers except as listed in Schedule 3.6.6 .  There is no known unexpired patent or patent application of others that includes claims that would be infringed by or that would or do limit the scope of the products, activities or business of Sellers as currently conducted.

3.6.7     To Sellers’ knowledge,  Sellers are not making unauthorized use of any confidential information or trade secrets of any person, including without limitation any former employer of any past or present employee of Sellers.  To Sellers’ knowledge, neither Sellers nor any employee of Sellers is obligated under any duty or agreement (including any license, confidentiality agreement, covenant or commitment of any nature), or subject to any judgment, decree or order of any court or administrative agency, that would interfere in any manner with the use of their best efforts to promote the interests of Sellers or that would impair the use of the Assigned Technology.  To Sellers’ knowledge, no employee or consultant is in violation of any proprietary information agreement or any similar agreement with any former employer or contractor, and the use of the Assigned Technology will not conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, such agreements.

3.7          Certain Contracts and Arrangements .   Schedule 3.7 contains a complete and accurate list of agreements to which Sellers or Sellers’ Affiliates are a party to or are bound by and that relate to or involve the Assets, including all:

(a)         contracts, agreements, purchase orders or acknowledgment forms for the purchase, sale, lease or other disposition of equipment, products, materials or capital assets, or for the performance of services, by Sellers or any of its Affiliates;

(b)         contracts or agreements for the joint performance of work or services and all other joint venture agreements;

(c)         contracts or agreements with agents, brokers, consignees, sales representatives or distributors relating to the sale of products or services by Sellers or any of its Affiliates; and

(d)         any other contract, instrument, agreement or obligation not described on any other Section to which Sellers or any of their Affiliates are a party or by which they are bound and which contains unfulfilled obligations of Sellers or any of their Affiliates.

3.8          Title and Condition of Assets.

3.8.1     Sellers own or possess a valid transferable right in, as the case may be, all of the Assets free and clear of all Liens, except (a) Liens for taxes (i) not yet due and payable, or (ii) being contested in good faith and identified in Schedule 3.8.1 (but in either case only those for which adequate accruals or reserves have been established by Sellers and shown on the face of the latest balance sheet), (b) the Lien created by the Loan Agreement and (c) Liens on the property or assets of FinePoint in favor of InPlay, the Uniform Commercial Code financing statements relating to which have been assigned to Buyer.

3.8.2     The Assets that constitute tangible personal property (a) are free from defects (patent and latent), have been maintained and operated in accordance with manufacturer’s specifications and prudent industry practices, and are in a good state of operating condition and repair, ordinary wear and tear excepted; and (b) are in the possession or control of Sellers.

3.8.3     At the Closing, Buyer will acquire good title (or in the case of Assigned Contracts and Third-Party Licenses, a valid transferred right) to all the Assets, free and clear of all Liens.

3.9          Status of Assigned Contracts .  Except as provided in Schedule 3.9 :

3.9.1     Each of the Assigned Contracts is valid, binding and enforceable by Sellers in accordance with its terms and is in full force and effect.  There is no existing breach, default or violation by Sellers under any Assigned Contract and no event has occurred that (whether with or without notice, lapse of time or both) would constitute a breach or default of Sellers under any Assigned Contract or permit termination, modification or acceleration under any Assigned Contract.

3.9.2     All Assigned Contracts will continue to be valid, binding, and enforceable and in full force and effect following the Closing.  All other parties to the Assigned Contracts have consented (where such consent is necessary) to the consummation of the transaction contemplated by this Agreement without requiring modification of rights or obligations of Sellers under any contract.  Complete and accurate copies of all Assigned Contracts have been delivered to Buyer.

3.9.3     To Sellers knowledge, no breach or default by any other party to any Assigned Contract has occurred, and no event has occurred that (whether with or without notice, lapse of time or both) would constitute a breach or default by any other party with respect to obligations of that party under any Assigned Contract or permit termination, modification or acceleration under any Contract, Sellers have no knowledge of facts that indicate any of the Assigned Contracts may be totally or partially terminated or suspended by, or have been repudiated by, the other parties.

3.9.4      There are no Assigned Contracts with respect to which:

(a)           Sellers can reasonably foresee will result in any loss to Buyers upon the performance thereof (including any liability for penalties or damages, whether liquidated, direct, indirect, incidental or consequential) or

(b)           is not terminable by Sellers on sixty (60) or fewer days’ notice at any time without penalty.

3.10        Taxes Returns and Payments .  Except as set forth on Schedule 3.10 , Sellers have filed on a timely basis all Tax returns and reports as required by Law.  Such Tax returns and reports correctly and completely reflect in all material respects Sellers’ liability for Taxes and all other information required to be reported thereon.  Sellers have paid all Taxes shown as payable on such returns or otherwise due.  Sellers have adequately provided for, in their books of account and related records, liability for all current Taxes not yet due and payable.  All Taxes which Sellers are required to withhold or collect have been withheld and collected and have been paid over to the proper Tax authorities.  Sellers have not received and are not aware of any basis for any issued, pending or proposed (a) notice of any audit, claim, deficiency, assessment, Lien or levy with respect to Taxes or (b) claim from a Tax authority in a jurisdiction in which Sellers do not file Tax returns that they are or may be required to file a Tax return or otherwise be subject to taxation by that jurisdiction.  Sellers are not the beneficiaries of any extension of time in which to file a Tax return and have not granted any power of attorney with respect to Taxes or any extension of time for the assessment or collection of any Tax.  Sellers are not parties to any Tax allocation or settlement agreement or similar arrangement that could require any payment to be made after the Closing Date.  Sellers are the subject of any pending or issued ruling from a Tax authority.

3.11        Permits and Licenses .   Schedule 1.1.6 contains a complete and correct list of all governmental licenses, permits, franchises, easements and authorizations (collectively, “Permits” ) held by Sellers and used in the Business.  Sellers hold, and at all times have held, all material Permits necessary for the lawful conduct of its business pursuant to all applicable statutes, laws, ordinances, rules and regulations of all governmental bodies, agencies and other authorities having jurisdiction over it or any part of its operations.  Sellers are in material compliance with all the terms of each Permit, and there are no claims of violation by any of Sellers or its Affiliates of any Permit.  Complete and accurate