ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (“ Agreement ”) is made this 14 ^th day of November, 2008 (the “ Agreement Date ”), by and among INX Inc., a Delaware corporation (“ Buyer ”), NetTeks Technology Consultants, Inc., a Massachusetts corporation (“ Seller ”), and Ethan F. Simmons, Matthew J. Field and Michael P. DiCenzo, each individuals (together, the “ Shareholders ” and each, individually, a “ Shareholder ”).

WHEREAS, Seller is engaged in the business of designing, installing and supporting network, unified communications, datacenter,  computer server and data storage systems and related technology in selected cities in the United States (the “ Seller’s Business ”);

WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller, certain assets, properties and rights of Seller utilized by it in connection with the operation of Seller’s Business upon the terms and conditions of this Agreement;

WHEREAS, Shareholders, collectively, are the owners of 100% of the outstanding capital stock of Seller;

WHEREAS, as an inducement to Buyer to enter into this Agreement, Shareholders have approved  this Agreement and desire to become a party to this Agreement pursuant to the terms hereof; and

WHEREAS, Seller has provided the Seller disclosure letter dated the same date as this Agreement, together with related schedules, attachments and exhibits thereto the “ Seller Disclosure Letter ”), which is attached hereto as Exhibit A and incorporated  by reference.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.1            Purchase and Sale of Assets .   Pursuant to the terms and subject to the conditions set forth in this Agreement, at the Closing (defined Section 1.8 below), Seller shall sell, assign, transfer, convey and deliver to Buyer, free and clear of all mortgages, pledges, liens, claims, charges, encumbrances and other security interests (collectively, “ Security Interests ”) other than Permitted Liens (as defined in 3.1(d) below), and Buyer shall purchase only the assets, properties, and rights of Seller described below (all of such specifically described assets, properties and rights being hereinafter collectively referred to as the “ Purchased Assets ”):

(a)            Personal Property .  All of the equipment, computer hardware, furniture, fixtures, appliances, furnishings, all computer and telecommunications equipment, appliances and systems which are owned by Seller, leasehold improvements and other personal property listed on Schedule 1.1(a) to the Seller Disclosure Letter;

(b)            Intellectual Property .  (i) All inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, including the right to enforce any rights embodied therein and to collect damages for any past, infringement of such rights by third parties, (ii) ideas and conceptions to the extent that such are legally recognized as a proprietary intangible right under common law or by a national (including the United States) or multinational statutory invention registrations, patents, patent registrations and patent applications (including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations) and all rights therein provided by international treaties or conventions and all improvements to the inventions disclosed in each such registration, patent or application, (iii) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, all applications, registrations, and renewals in connection therewith, and the right to register, perfect and enforce any rights embodied therein and to collect damages for any past, infringement of such rights by third parties, (iv) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (v) all mask works and all applications, registrations, and renewals in connection therewith, (vi) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, techniques, technical data, designs, drawings, specifications, customer, supplier and vendor lists, pricing and cost information, and business and marketing plans and proposals), (vi) all computer software (including data and related documentation) developed or owned by Seller, including source code, operating systems and specifications, data, databases files, documentation and other materials and documentation related thereto, (vii) all other proprietary rights, (viii) all licenses, and (ix) all copies and tangible embodiments thereof (in whatever form or medium) (collectively, (i) through (ix) above, the “ Intellectual Property ”);

(c)            Domain Names .  All of Seller’s right, title and interest in and to each domain name and the registration thereof, all associated universal resource locators, whether registered in the name of Seller or by any other person on behalf of Seller, together with all goodwill connected with and symbolized by such domain names or locators, and any intellectual property rights relating thereto, including, but not limited to, e-mail addresses, websites, translations, adaptations, derivations, copyrights, and combinations thereof, all applications, registrations, and renewals in connection therewith, and the right to register, perfect and enforce any rights embodied therein, including the right to collect damages for any past, infringement of such rights by third parties to the extent any such intellectual property rights exist (the “ Domain Names ”), each of which is listed on Schedule 1.1(c) to the Seller Disclosure Letter;

(d)            Documents .  A copy of all of Seller’s books, records, papers and documents which relate to the Purchased Assets, including all purchase and sales records and customer and supplier records;

(e)            Inventory .  All inventories of product including raw material, work-in-process, finished products, packing materials, stores and supplies, spare parts, samples, point of sale material and merchandise of Seller held for resale by Seller, but only to the extent listed on Schedule 1.1(e) to the Seller Disclosure Letter (the “ Inventory ”);

(f)            Contract Rights.

(i)            All rights under the uncompleted portion of the Acquired Partially Completed Contracts (as defined in Section 2.21);

(ii)           All rights whatsoever to all contracts, agreements, joint ventures, commitments, leases, licenses, purchase orders and other agreements, whether oral or written arising out of the operation of Seller’s Business other than the Retained Partially Completed Contracts and the Acquired Partially Completed Contracts, including but not limited to those listed on Schedule 1.1(f)(ii) to the Seller Disclosure Letter (the “ Acquired Contracts ”)

(h)            Manufactures’ and Vendors’ Warranties.    All rights under manufacturers’ and vendors’ warranties related to items included in the Purchased Assets, including but not limited to such of the foregoing as are listed on Schedule 1.1(h) to the Seller Disclosure Letter.

(i)             Supplier Rebates.    All rights to vendor rebates and credits relating to periods before or after the Closing; provided, however, that such rights shall not include any rights to rebates or credits relating to (A) defective products or inventory for which Seller has, prior to the Closing (i) submitted a written claim, (ii) returned such defective product or inventory and (iii) recorded a receivable on Seller’s financial records or (B) any fully accrued Cisco VIP.12 rebates have been properly realized by Seller prior to the Closing Date.

(j)             Deposits.    All cash and collateral deposits made under the terms of leases and other contracts included in clauses (a) through (j) above.

1.2            Assets Excluded from Sale .   Other than the Purchased Assets, Buyer is not purchasing and Seller is not selling any other asset or right of Seller and the parties hereby expressly exclude the assets set forth on Schedule 1.2 to the Seller Disclosure Letter.

1.3            Transfer of Purchased Assets .   Seller shall deliver or cause to be delivered to Buyer such other good and sufficient instruments reasonably requested by Buyer transferring to Buyer title to all of the Purchased Assets or Seller’s interest therein, all in accordance with this Agreement.  Such instruments of transfer (a) shall be in the form which is usual and customary for transferring the type of property involved under the laws of the jurisdictions applicable to such transfers, (b) shall be in form and substance reasonably satisfactory to Buyer and its counsel, (c) shall effectively vest in Buyer good and marketable title, or Seller’s interest therein as provided in this Agreement, to all of the Purchased Assets, free and clear of all Security Interests other than Permitted Liens, and (d) where applicable, shall be accompanied by evidence of the discharge of all Security Interests against the Purchased Assets.

1.4            Retained Liabilities .    Buyer shall not assume and shall not be liable for any Liabilities (as defined below) of Seller other than the Assumed Liabilities (as defined in Section 1.5 below) (collectively, the “ Retained Liabilities ”), and all such Retained Liabilities shall be and remain the responsibility of Seller, including, without limitation, any Liabilities arising out of or the result of any activity associated with the Purchased Assets prior to the Closing, Liabilities under any contract to which Seller is a party, Liabilities with respect to all Taxes (as defined in Section 2.12 below), Liabilities relating to, or arising under or in connection with, any Employee Benefit Plan (as defined in Section 3.1(p) below), or any Liabilities related to any Environmental Law (as defined in Section 3.1(t) below).  Seller shall discharge in a timely manner or shall make adequate provision for all Retained Liabilities, Shareholders and Seller shall jointly and severally indemnify Buyer and hold it harmless against all Retained Liabilities.  As used in this Agreement, the term “ Liability ” and “ Liabilities ” shall mean and include any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted or unasserted, liquidated or unliquidated, secured or unsecured.

1.5            Assumed Liabilities. As of the Closing, Buyer will assume and thereafter in due course pay and fully satisfy, as and when the same shall become due and payable, the following liabilities and obligations (the “ Assumed Liabilities ”):

(a)           the liabilities and obligations of Seller arising in the regular and ordinary course of the conduct of Seller’s Business consistent with past practice prior to the Closing Date, under (i) the Acquired Contracts and (ii) the obligations remaining after the Closing under the Acquired Partially Completed Contracts, but excluding any liabilities resulting from (A) the Retained Partially Completed Contracts or (B) any warranty claim or breach of any contract prior to the Closing Date;

(b)           all payment liabilities arising under the promissory notes made payable by the Seller which are directly associated with Tangible Personal Property included in the Purchased Assets, with such liabilities not to exceed $20,000, as set forth on Schedule 1.5(b) to the Seller Disclosure Letter;

(c)           all payment liabilities arising under the vendor accounts listed on Schedule 1.5(c) to the Seller Disclosure Letter;

(d)           all obligations arising after the Closing Date under the office space lease contracts for the office space located at 2 Oliver Street, Boston  MA  02109, which property lease contracts are set forth on Schedule 3.1(j)(ii) to the Seller Disclosure Letter; provided, however, that all rent payment obligations paid by Seller prior to Closing for any period after the Closing shall be prorated between Seller and Buyer based on the time period the lease space was occupied by Seller prior to Closing;

(e)           all obligations arising after the Closing Date under the equipment lease contracts listed on Schedule 1.5(e) to the Seller Disclosure Letter, with an aggregate remaining balance of approximately $36,321.00.

1.6             Purchase Price .   The purchase price for the Purchased Assets and the covenants of Shareholders and Seller included herein, is an aggregate purchase price of one million five hundred and fifty thousand dollars ($1,550,000), consisting of (i) one million three hundred fifty thousand dollars ($1,350,000) in cash (the “ Cash Consideration ”) plus (ii) certificates representing 30,770 shares (the “ Stock Consideration ”) of the Buyer’s common stock, $0.001 par value, (“ Buyer Common Stock ”) which number of shares was determined by dividing two hundred thousand dollars $200,000 by  $6.50 per share for purposes of calculating the number of shares of Stock Consideration. The Stock Consideration shall be issued and delivered to Seller at the Closing; provided, however, that Buyer shall retain and hold in escrow in accordance with Section 2.19 below, 15,385 shares of Stock Consideration (the “ Holdback Shares ”) which has a value of one hundred thousand dollars ($100,000) based on the calculations set forth above.

1.7            Additional Purchase Consideration .  As additional consideration for the Purchase, the Buyer will pay additional purchase consideration to the Seller following the Closing Date based on and contingent upon certain post-Closing financial performance beginning on the first day of the first full calendar month after the Closing (the “ Additional Purchase Consideration ”) as set forth in this section 1.7.

(a)            Seller NetTeks Business Operations Performance .  Buyer will pay Seller a variable contingent payment based on and contingent upon the financial performance of the Buyer’s business unit that is comprised, after the Closing Date, solely of the Seller’s business activities at its current locations in Boston, Massachusetts and Glastonbury, Connecticut, acquired in connection with the Purchase Transaction (defined below) (the “ NetTeks Business Operations” ) which operations shall not include the Buyer’s business operations located in the greater Boston-metro area immediately prior to the Closing Date.  As used in this Agreement, this component of the Additional Purchase Consideration shall be referred to as the “ NetTeks Business Operations Earnout ”.  For purposes of this Agreement, the term “ NetTeks Business Operations Operating Income Contribution ” means the Operating Income (as defined by GAAP as applied by Buyer in operating its business) contribution attributable to the NetTeks Business Operations before any allocation of the Buyer’s corporate-level operations and administrative expenses, all as determined by the Buyer using its normal accounting methodologies and processes, and in accordance with Generally Accepted Accounting Principles (“ GAAP ”).  The NetTeks Business Operations Earnout will be calculated and paid in two components, the first based on the first 12-month period following the Closing Date (the “ First Year Measurement Period ”) and the second based on the second 12-month period following the Closing Date (the “ Second Year Measurement Period ”), as set forth below.

(i)            First Year.   The first year component will be based on achievement of NetTeks Business Operations Operating Income Contribution during the First Year Measurement Period and will be equal to seven hundred fifty thousand dollars $750,000 times the Attainment Percentage (defined below).  As used in this Section 1.7(a)(i), the term “ Performance Ratio ” shall mean the percentage resulting from dividing actual Operating Income Contribution From NetTeks Business Operations during the First Year Measurement Period by $ 567,000. After establishing the Performance Ratio, the percentage used to calculate this component of the Additional Purchase Consideration shall be calculated (as used in this Section 1.7(a)(i), the “ Attainment Percentage ”) as follows:  The Attainment Percentage shall be equal to the Performance Ratio if the Performance Ratio is 100%, however, if the Performance Ratio is less than 100%, the Attainment Percentage shall be reduced by 1% for each 1% that the Performance Ratio is less than 100%, and if the Performance Ratio is more than 100%, the Attainment Percentage shall be increased by 1% for each 1% that the Performance Ratio exceeds 100% up to 150%, and shall increase by 0.5% for each 1% between 150% and up to 200%; provided, however, if the above calculation results in an Attainment Percentage that is less than 50%, then the Attainment Percentage shall be zero, and if such calculation results in an Attainment Percentage that is greater than 200%, the Attainment Percentage shall be 200%.

(ii)            Second Year.   The second year component will be based on achievement of NetTeks Business Operations Operating Income Contribution during the Second Year Measurement Period and will be equal to eight hundred and fifty thousand dollars $850,000 times the Attainment Percentage (defined below).  As used in this Section 1.7(a)(ii), the term “ Performance Ratio ” shall mean the percentage resulting from dividing actual Operating Income Contribution from NetTeks Business Operations during the Second Year Measurement Period by $ 914,000. After establishing the Performance Ratio, the percentage used to calculate this component of the Additional Purchase Consideration shall be calculated (as used in this Section 1.7(a)(ii), the “ Attainment Percentage ”) as follows:  The Attainment Percentage shall be equal to the Performance Ratio if the Performance Ratio is 100%, however, if the Performance Ratio is less than 100%, the Attainment Percentage shall be reduced by 1% for each 1% that the Performance Ratio is less than 100%, and if the Performance Ratio is more than 100%, the Attainment Percentage shall be increased by 1% for each 1% that the Performance Ratio exceeds 100% up to 150% and shall increase by 0.5% for each 1% between 150%  and up to 200%; provided, however, if the above calculation results in an Attainment Percentage that is less than 50%, then the Attainment Percentage shall be zero, and if such calculation results in an Attainment Percentage that is greater than 200%, the Attainment Percentage shall be 200%.

(b)           Each payment of Additional Purchase Consideration shall be calculated and paid by Buyer to Seller within ninety (90) days of the end of the measurement period for which such payment relates. In addition, 50% of all Additional Purchase Consideration shall be paid in cash and the remainder shall be paid to the Seller, at the Buyers option, by either cash or the issuance to Seller of such number of shares of Buyer Common Stock determined by dividing fifty percent (50%) of the Additional Purchase Consideration payable for such payment by the price of Buyer’s Common Stock using the average closing price per share for the Common Stock as reported by the NASDAQ for the five (5) consecutive trading days ending prior to the second day before the date of funding of such payment of Additional Purchase Consideration.

1.8            Closing .   The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of INX Inc. 6401 Southwest Freeway,  1st  Floor, Houston, Texas 77074 on the later of (a) the Agreement Date, or (b) the first business day after all of the conditions set forth in Articles VI and VII hereof have been satisfied or waived, or such other place and time as the parties may mutually agree (the “ Closing Date ”).  All of the deliveries and other transactions required to take place at the Closing and all documents relating thereto shall be interdependent and none shall be effective unless and until all are effective (except to the extent that the party entitled to the benefit thereof has waived satisfaction or performance thereof in writing as a condition precedent hereto).

1.9             Deliveries at the Closing .   At the Closing, (a) Seller shall deliver to Buyer the various certificates, instruments and documents referred to in Article VI below, and (b) Buyer will deliver to Seller the various certificates, instruments, and documents referred to in Article VII below.

1.10          Consummation of Closing .   All acts, deliveries, and confirmations comprising the Closing, regardless of chronological sequence, shall be deemed to occur contemporaneously and simultaneously upon the occurrence of the last act, delivery, or confirmation of the Closing and none of such acts, deliveries, or confirmations shall be effective unless and until the last of the same shall have occurred.

2.1            Noncompetition, Nonsolicitation and   Confidentiality .   For purposes of this Agreement, the following definitions shall apply:

(a)           “ Affiliate ” with respect to any Person, shall mean and include any Person controlling, controlled by or under common control with such Person either as of or following the date of this Agreement;

(b)           “ Company Activities ” shall mean either (i) designing, installing or supporting computer data networks, IP telephony systems and/or datacenter virtualization projects, (ii) promoting, marketing or selling computer data network equipment, IP telephony systems and/or datacenter related equipment (including servers and data storage equipment), (iii) designing, implementing, promoting, marketing or selling software applications for IP telephony applications and/or virtualization software, or (iv) engaging in any other business activities which are conducted, offered or provided by Seller, Buyer or any Affiliate of either of them at any time during the 12-month period prior to the date of this Agreement, including, without limitation, all activities associated with Seller’s Business but expressly excluding any of these activities if performed  (A) in conjunction with employment duties for a manufacturer or  (B) as part of an organization’s internal IT staff.

(c)           “ Confidential Information ” shall mean any data or information (whether written or not, tangible or intangible), of Buyer, Seller or any Affiliate of either of them, other than Trade Secrets (as defined below), which is valuable to Buyer, Seller or any Affiliate of either of them and not generally known to competitors or which by its nature is generally treated as confidential or proprietary;

(d)           “ Noncompete Period ” shall mean from the Closing Date through the date five years after the Closing Date;

(e)           “ Nonsolicitation Period ” shall mean from the Closing Date through the date five years after the Closing Date;

(f)           “ Person ” shall mean any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization or other entity;

(g)           “ Protected Area ” shall mean the states of Massachusetts and Connecticut  and

(h)           “ Trade Secrets ” shall mean information related to the Company Activities, including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, or programs, including, without limitation, computer software and related source codes, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans, lists of actual or potential customers or suppliers, or other information similar to any of the foregoing, which derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use.

2.2            Confidentiality .   Buyer, Seller and Shareholders shall keep confidential the existence of this Agreement, the transactions described herein and all Trade Secrets and Confidential Information relating to the Company Activities; provided, however, that Seller and Shareholders may, upon obtaining the prior written consent of the Buyer, disclose the existence of this Agreement and the terms hereof, but solely in the manner and subject to any restrictions or limitations imposed on such disclosure by Buyer in connection with granting such prior written consent.  The provisions of this Section 2.2 shall not apply with respect to any information which (a) was already known by one party when such information was received from the other party, (b) was available to the general public at the time of such receipt, (c) subsequently becomes known to the general public through no fault or omission by a party hereto, (d) is subsequently disclosed by a third party which has the bona fide right to make such disclosure, (e) is disclosed by either in confidence to its professional advisors or by Buyer to potential lenders and investors who agree to keep such information confidential, (f) is required to be disclosed by law or a governmental agency, including for income tax reporting purposes (and the filing of this Agreement by Buyer with the Securities and Exchange Commission is expected), or (g) is required to be disclosed in order to enforce this Agreement.

2.3            Trade Secrets .   Seller and Shareholders, as well as the officers, directors and employees of Seller shall hold in confidence at all times after the date hereof all Trade Secrets and Confidential Information related to Seller, Buyer and any of either of their Affiliates and shall not disclose, publish or make use of those Trade Secrets or Confidential Information at any time after the date hereof, without the prior written consent of Buyer, except (a) any information or document required to be disclosed by law or (b) information that becomes public knowledge through means other than an act of Shareholders or Seller.  Nothing in this Agreement shall diminish the rights of Seller or Buyer regarding the protection of Trade Secrets, Confidential Information and other intellectual property pursuant to applicable law.

2.4            Trade Name and Confidential   Information.

(a)           Seller and Shareholders shall not, directly or by assisting others, own, manage, operate, join, control or participate in the ownership, management, operation or control of any business conducted under the corporate or trade name of Seller (or any variation thereof) or any of its Affiliates (other than as an employee of Buyer or one of its Affiliates) without the prior written consent of Buyer; and

(b)           Seller and Shareholders shall hold in confidence all Confidential Information related to Seller, Buyer or any of either of their Affiliates and shall not disclose, publish or make use of that Confidential Information without the prior written consent of Buyer, except (i) any information or document required to be disclosed by law or (ii) information that becomes public knowledge through means other than an act of Seller or Shareholders.

2.5            Non-Competition .

(a)            Coverage .  Seller and Shareholders hereby acknowledge that Buyer, either directly or indirectly through one or more of its Affiliates, conducts or will conduct Company Activities throughout the Protected Area, and acknowledges that to protect adequately the interest of Buyer in the operation of each Person through which it will engage in Company Activities after the date of this Agreement, it is essential that any noncompete covenant with respect thereto cover all Company Activities in the Protected Area except as specifically provided in Section 2.5(b) below.

(b)            Covenant .  During the Noncompete Period, neither Seller nor Shareholders shall in any manner, directly or indirectly, engage in or have an equity or profit interest in, or render services to any business that conducts any Company Activities in the Protected Area.  Notwithstanding anything herein to the contrary, nothing in this Agreement shall prevent or prohibit Seller or Shareholders from owning not more than 5% of a class of equity securities issued by any entity listed on any national securities exchange or interdealer quotation system.

2.6            Nonsolicitation of and Noninterference with Employees, Customers and Vendors .   During the Nonsolicitation Period, neither Seller nor Shareholders shall, in any manner, directly or indirectly:

(a)           solicit or attempt to solicit, any business from any customers or prospective customers of Buyer or any of its Affiliates for purposes of engaging in any Company Activities in any Protected Area;

(b)           recruit or hire away or attempt to recruit or hire away, on its behalf or on behalf of any other person, firm or corporation, any employee of Buyer or any of its Affiliates; or

(c)           interfere with or otherwise attempt to affect Buyer’s relationship with any employee, customer, or prospective customer, supplier or vendor of Buyer or any of its Affiliates.

2.7            Acknowledgment .   Seller, Shareholders and Buyer each acknowledge and agree that the covenants set forth in Sections 2.2, 2.3, 2.4, 2.5 and 2.6 are reasonable as to time, scope and territory given Buyer’s need to protect its Trade Secrets, Confidential Information and its substantial investment in the Purchased Assets, its employees, customers and vendors, particularly given the complexity and competitive nature of Buyer’s and its Affiliate’s business.  Seller and Shareholders further acknowledge that (a) it would be difficult to calculate damages to Buyer and its Affiliates from any breach of Seller’s or Shareholders’ obligations under either of Sections 2.2, 2.3, 2.4, 2.5 or 2.6, (b) that injuries to Buyer and its Affiliates from any such breach would be irreparable and impossible to measure, and (c) that the remedy at law for any breach or threatened breach of Seller’s or Shareholders’ obligations under either of Sections 2.2, 2.3, 2.4, 2.5 or 2.6 of this Agreement would therefore be an inadequate remedy, and accordingly, Buyer shall, in addition to all other available remedies (including without limitation seeking such damages as it can show it and its Affiliates have sustained by reason of such breach or the exercise of all other rights it has under this Agreement), be entitled to injunctive and other similar equitable remedies.  Each Shareholder acknowledges that he will be subject to separate noncompete and nonsolicitation provisions in connection with his employment by Buyer following the Closing.  Accordingly, if the duration or scope of the noncompete or nonsolicitation applicable to Shareholders under the terms of Buyer’s standard employment documents is for any reason shorter than the duration of the Noncompete Period or Nonsolicitation Period or narrower in scope than as set forth in this Agreement or if any term or condition set forth in Section 7 of the Employment Agreement (as defined in Section 3.1(u) below) conflicts with any term or condition in contained in this Article II, Shareholders hereby acknowledges that he shall be subject to the Noncompete Period and Nonsolicitation Period set forth in this Agreement and the terms and conditions of this Article II shall be given precedence over any conflicting term or condition set forth in Section 7 of the Employment Agreement, notwithstanding any of the terms of his employment terms with Buyer.

2.8            Further Assurances .   Each party hereto from time to time hereafter at any other party's request and without further consideration shall execute and deliver to such other party such instruments of transfer, conveyance and assignment in addition to those delivered pursuant to this Agreement as shall be reasonably requested to transfer, convey and assign more effectively the Purchased Assets to Buyer, the costs of which shall be paid by the requesting party.

2.9            Expenses .   Except as otherwise provided herein, Buyer, Seller and Shareholders shall each be responsible for their own expenses incurred in connection with the negotiations among the parties, and the authorization, preparation, execution and performance of this Agreement and the transactions contemplated hereby.  In addition, Seller shall be responsible for all costs associated with terminating any Employee Benefit Plan of Seller (e.g., 401(k), pension, profit sharing plans) prior to or at Closing.

2.10          Brokers .   Buyer shall indemnify Seller and hold it harmless from and against all claims or demands for commissions or other compensation by any broker, finder, or similar agent claiming to have been employed by or on behalf of Buyer.  Seller and Shareholders shall jointly and severally indemnify Buyer and hold it harmless from and against all claims or demands for commissions or other compensation by any broker, finder or similar agent claiming to have been employed by or on behalf of Seller.

2.11          Publicity .   After the Closing Date, all press releases and other public announcements respecting the subject matter hereof shall be made only by Buyer; provided, however, that Seller may make any disclosure required to be made under applicable law if it has determined in good faith that it is necessary to do so and used its best efforts, prior to the issuance of the disclosure, to provide Buyer with a copy of the proposed disclosure and to discuss the proposed disclosure with Buyer.

2.12          Liability for Taxes.

(a)    Definition .  As used herein, “ Tax ” or “ Taxes ” means all taxes, however denominated, including any interest or penalties or additions thereto whether disputed or not, including any obligation to indemnify or otherwise assume or succeed to the tax Liability of any other Person that may become payable in respect thereof, imposed by any federal, state, local or foreign government or any agency or political subdivision of any such government, which taxes shall include, without limiting the generality of the foregoing, all income taxes (including, but not limited to, United States federal income taxes and state income Taxes), payroll and employee withholding taxes, unemployment insurance, social security, sales and use taxes, excise taxes, environmental taxes, franchise taxes, gross receipts taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer taxes, withholding taxes, workers’ compensation taxes, escheat, value-added taxes, alternative or add-on minimum taxes and other obligations of the same or of a similar nature, whether discovered before, on or after the Closing.

(b)            Taxes Before  the Closing .  Seller shall be liable for, and shall together with Shareholders, jointly and severally, indemnify and hold Buyer harmless from, (a) all Taxes (as defined above) and Security Interests relating to any Taxes that are imposed on (either before or after the Closing Date) or incurred with respect to the Purchased Assets for any period ending on or before the Closing Date, (b) any Taxes payable as a result of a breach by Seller or Shareholders of any of the representations set forth in Section 3.1(i)   hereof, and (c) any necessary and reasonable attorneys’ fees or other costs incurred by Buyer or its Affiliates in connection with any payment from Seller under this Section 2.12(b).  Buyer and Seller agree to provide assistance to one another and to cooperate fully with one another after the Closing Date to account for all Taxes that may be imposed on or incurred with respect to the Purchased Assets during any period prior to the Closing Date.

(c)             Taxes Following  the Closing .  Buyer shall be liable for, and shall indemnify and hold Seller and Shareholders harmless from, (a) all Taxes (as defined above) and Security Interests relating to any Taxes that are imposed on or incurred with respect to the Purchased Assets for any period commencing and ending after the Closing Date, and (b) any necessary and reasonable attorneys’ fees or other costs incurred by Seller or Shareholders in connection with any payment from Buyer under this Section 2.12(c).

(d)            Sales, Transfer and Excise Taxes .  Buyer shall pay directly all excise, sales, transfer and other similar Taxes, levies and charges from the California State Board of Equalization and any similar California state taxing authority, (including all bulk sales taxes, if any), that may be imposed upon, or payable or collectible or incurred in connection with, this Agreement and the transactions contemplated herein.  All obligations under this Section 2.12 shall survive the Closing hereunder and continue until 30 days following the expiration of the statute of limitations on assessment of the relevant Tax.

2.13          Right to Refunds .   If Seller, on the one hand, or Buyer, on the other hand, receives a refund of any Taxes for which the other has paid such Taxes, then the party receiving such refund shall, within 30 days after its receipt, remit such refund to the party who paid such Taxes; provided, however, that this section shall not affect the Liability of the parties for Taxes as set forth in Section 2.12(b) or 2.12(c) hereof.

2.14          Intercompany Transactions.   Prior to the Closing, all intercompany payables and receivables between Seller and Shareholders and between Seller and any of its Affiliates that in any way are related to or otherwise affect any Purchased Asset shall be released by Seller, Shareholders or any Affiliate of either of them, as the case may be, and Shareholders hereby release any claims or other rights he or she may have in and to any of the Purchased Assets.

2.15          Allocation of Purchase Price .   For all income tax purposes, each of the parties shall report the transactions contemplated by this Agreement as an “applicable asset acquisition” by Buyer within the meaning of Section 1060 of the Internal Revenue Code of 1986, as amended.  In connection therewith, each of the parties hereby agrees that the fair market value of any Class I, Class II, Class III, Class IV or Class V assets (as described in Section 1.1060-1(c)(2) of the Treasury Regulations) of Seller at the Closing will be equal to their respective federal income tax bases to Seller immediately prior thereto, and the excess of the total consideration (as determined pursuant to Section 1.1060-1(c)(1) of the Treasury Regulations) paid for the Purchased Assets by Buyer over such aggregate tax bases shall be allocable to Class VI and Class VII assets as described in such Treasury Regulations.  Buyer and Seller shall cooperate in good faith to mutually agree upon and complete IRS Form 8594 (Asset Acquisition Statement Under Section 1060).  Buyer shall prepare and deliver a draft IRS Form 8594 (Asset Acquisition Statement Under Section 1060) to Seller within 180 days after the Closing Date and unless Seller objects to such draft IRS Form 8594 within ten day of its receipt from Buyer, Seller shall be deemed to have agreed to such draft IRS Form 8594.  Seller shall timely file such Form 8594 with the IRS reporting the transaction in compliance with this Section 2.15.  In any proceeding related to the determination of any Tax, no party may contend or represent that the allocation is not a current allocation.

2.16          Name Change .   Seller shall execute and deliver an amendment to its Articles of Incorporation to change its name to a name other than NetTeks Technology Consultants, Inc. or any variant thereof in acceptable form to be filed with the Massachusetts Secretary of State office and any other jurisdiction where Seller is qualified to do business within 180 days following the date of this Agreement; provided, however, that for a period of one year following the Closing Date, Buyer  hereby grants to Seller the non-exclusive and terminable right and license to use the name  “NetTeks Technology Consultants, Inc.” solely for purposes of facilitating invoicing and billing of customers party to any Retained Partially Completed Contract.

2.17          Employees .   The term “ Key Employees ” shall be defined as those individuals listed on Schedule 2.17 to the Seller Disclosure Letter.  Other than the Key Employees, Buyer shall have no obligation to offer employment to any of Seller’s existing employees.

2.18          Consent of Third Parties.

(a)           Despite anything to the contrary in this Agreement, this Agreement shall not constitute an assignment or transfer of, or an agreement to assign or transfer, any Governmental Approval (defined below), contract, instrument, lease, permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or would violate any applicable law or regulation, or would otherwise affect adversely the rights of Seller or Buyer thereunder; and any transfer or assignment by Seller of any interest under any such Governmental Approval, contract, instrument, lease, permit or other agreement or arrangement that requires the consent or approval of a third party shall be made subject to such consent or approval being first obtained.  As used herein, “ Governmental Approval ” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any federal, state or local government, or any political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any governmental authority, agency, department, board, commission or instrumentality of the United States, any state of the United States or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

(b)           Seller will give any required notices, and Buyer and Seller will cooperate following the Closing, using their respective commercially reasonable best efforts, in order to obtain necessary third party consents to the sale and transfer of the Purchased Assets as contemplated by this Agreement.

(c)           Seller and Buyer will give any notices to, make any filings with, and use its commercially reasonable efforts to obtain any Governmental Approval in connection with the consummation of the transactions contemplated by this Agreement.

(d)           With respect to any consents or approvals that have not been obtained on or before the Closing Date, Seller and Buyer shall cooperate in any lawful arrangement that is reasonable for both Buyer and Seller (considering all relevant factors including practicality, financial burden and risk) to provide that Buyer shall receive the interest of Seller in the net benefits under any such Governmental Approval, contract, instrument, lease, permit or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom.  Such arrangements may include (if lawful and reasonable considering all relevant factors) the performance by Buyer as agent for Seller such that Buyer will derive the benefit of such agreement to the extent that Buyer would have benefited if the necessary third party consent or approval had been obtained.  Seller and Buyer agree to use their respective good faith, commercially reasonable efforts to negotiate and document any such arrangements.

2.19          Holdback Shares .  On the Closing Date the Buyer shall retain the Holdback Shares to be held by the Buyer (“ Escrow Agent ”) in escrow to satisfy any claims by Buyer against Seller or Shareholders for a period of up to one (1) year after the Closing Date (the “ Escrow Period ”), in accordance with the terms of this Agreement.  At the end of each calendar month during the Escrow Period Buyer shall, in good faith, determine the amount of any claims under this Agreement and deliver to the Seller notice of the number of Holdback Shares to be disbursed to address any such claims by Buyer.  Following the expiration of the Escrow Period, Buyer shall cause the remaining balance of the Holdback Shares, after the payment of all such claims and reservation of amounts reasonably deemed sufficient to satisfy unresolved claims, to be distributed by the Escrow Agent to Seller within five (5) Business Days in accordance with the terms of this Agreement.  The costs and expenses associated with the establishment and maintenance of the Holdback Shares shall be borne by the Buyer.

2.20          Retained Partially Completed Contracts .  There are certain uncompleted customer contracts of Seller that will be retained by Seller after Closing, either because such contracts were already substantially fulfilled and billed by Seller prior to Closing, or because the consent to assignment of the contract cannot be obtained from the customer, or for other reasons.  All of these retained partially completed customer contracts (the “ Retained Partially Completed Contracts ”) are listed on Schedule 2.20 to the Seller Disclosure Letter.  Seller shall retain the Retained Partially Completed Contracts following the Closing, and will retain the obligations and duties under the Retained Partially Completed Contracts following Closing, but shall utilize Buyer exclusively as Seller’s agent to perform the services to the customer required to complete the Retained Partially Completed Contracts following Closing.  Seller and Buyer shall cooperate with each other in good faith to ensure that customers party to a Retained Partially Completed Contract, properly direct to Seller all payments owed to Seller thereunder.  In the event that through error or mistake, any customer party to a Retained Partially Completed Contract, directly pays Buyer for any amount owed by such customer to Seller under a party to a Retained Partially Completed Contract, Buyer shall promptly forward such misdirected amounts to Seller.

(a)           In order to fulfill any obligation or duty under the Retained Partially Completed Contracts to deliver products to the customer following the Closing, Seller shall acquire such products exclusively from Buyer, at a price equal to the price to be billed to the customer under the Retained Partially Completed Contract, such that any gross profit generated from deliveries of products to the customer under the Retained Partially Completed Contracts after the Closing is fully realized by Buyer and no gross profit is realized by Seller following the Closing.

(b)           Seller shall engage Buyer, as Seller’s exclusive agent, to perform any and all services that are required to complete the Retained Partially Completed Contracts, billing Seller for such services at Buyer’s Service Billing Rates (defined below) for such services.  Buyer’s hourly billing rates for service work, which shall apply for all purposes under this Agreement, are set forth on Schedule 2.20(b) to the Seller Disclosure Letter (the “ Buyer’s Service Billing Rates ”).

2.21          Acquired Partially Completed Contracts .  There will be certain partially completed customer contracts of Seller, other than the Acquired NetCare Monitoring Contacts (as define below) and the Acquired Pre-Paid Contracts (as defined below), that will be assigned or conveyed to Buyer by Seller pursuant to this Agreement for which Seller has already performed a certain portion of such contracts prior to closing, and/or Seller has already billed the customer prior to Closing for a portion of such contracts, which acquired partially completed contracts are listed on Schedule 2.21 to the Seller Disclosure Letter (the “ Acquired Partially Completed Contracts ”).  Following the Closing, Seller and Buyer shall cooperate to ensure that Buyer and Seller share in the Economic Benefit (defined below) of each of the Acquired Partially Completed Contracts based on the percentage of the total contract that was completed by Seller prior to the Closing as compared to the total percentage of the contract that was completed by Buyer following the Closing.  For this purpose, the percentage of completion of each such Acquired Partially Completed Contract shall be calculated based upon the total Direct Cost (defined below) of performing such contract incurred by Seller prior to the Closing, as compared to the total Direct Cost of performing such contract by Buyer following the Closing, calculated after the Acquired Partially Completed Contract is completed by Buyer following the Closing.  As used in this Section 2.21, the term “ Direct Cost ” shall mean any (a) direct cost of inventory, goods and equipment, including freight and shipping costs, (b) direct, unburdened labor cost of technician and/or engineering employees, and (c) direct cost of a subcontractor used to perform the contract; provided that Seller’s Direct Cost shall be reduced by the amount of any warranty claim by customer or rejection of deliverables by customer that occur after the Closing but relate to goods or services provided by Seller prior to the Closing.  Buyer shall incur no Direct Cost of performing such contracts prior to the Closing and Seller shall incur no Direct Cost of performing such contracts after the Closing.  Schedule 2.21 to the Seller Disclosure Letter sets forth all of the Direct Cost that Seller has incurred in performing the Acquired Partially Completed Contracts as of the Closing Date and shall be the Direct Cost used following the Closing to calculate the percentage of total Direct Cost incurred by Seller prior to the Closing as compared to the percentage of total Direct Cost incurred by Buyer following the Closing.  After each of the Acquired Partially Completed Contracts has been completed by Buyer following the Closing, Buyer shall, as soon as practicable, provide Seller with a complete accounting of the cost incurred by Buyer in performing such contract, and Buyer shall pay Seller, or Seller shall pay Buyer, as the case may be, in order to ensure that Buyer and Seller each receive their appropriate percentage of the total Economic Benefit from each such contract.  As used in this Section 2.21, the term “ Economic Benefit ” shall mean the total contract amount less the total of all combined Direct Costs incurred by Seller and Buyer in the performance of such contract, and shall take into consideration which party (Buyer or Seller) received funds from the customer in payment of such contract.

2.22          Warranty Matters.   Buyer is not assuming any liability to perform warranty work for equipment or services provided by Seller to customers prior to the Closing Date.  Seller shall be responsible for the cost of supplying warranty service, if any, after the Closing Date related to revenue recognized by Seller prior to the Closing.  Because (i) Seller will not have the necessary resources to perform such warranty service after the Closing, (ii) performing such warranty service in a satisfactory manner is necessary in order to maintain a satisfactory customer relationship between the customer and Buyer following the Closing, (iii) the cost of performing such warranty service cannot be determined until the warranty service period is completed, and (iv) if Seller was unable or unwilling to ensure that such warranty service was provided such could result in a material adverse effect on Buyer’s relationship with a customer following the Closing, Buyer and Seller agree as follows:

(a)           After the Closing, Buyer will perform the above-referenced warranty service on behalf of Seller, using commercially reasonable efforts to perform such warranty services in a satisfactory and efficient manner.

(b)           Buyer shall invoice Seller for all such warranty service, invoicing Seller for such services at a rate of seventy five percent (75%) of Buyer’s Service Billing Rates for service work and at a ten percent (10%) markup for parts, inventory, or subcontracted services used in the performance of such warranty service, and Seller shall pay such invoices within thirty (30) days of invoice date. Any amounts that remain unpaid by Seller to Buyer for the performance by Buyer of the above-mentioned warranty service shall be offset from the Additional Purchase Consideration or any other amount owed or payable by Buyer to Seller or Shareholders under this Agreement.

2.23          Buyer Purchase of Required Unreceived Inventory .  Buyer shall purchase, as required to fulfill orders for customers, the products that Seller had on order with Seller’s vendors on the Closing Date, but which were not received into Seller’s inventory on the Closing Date, including the inventory which was on order with Seller’s vendors on the Closing Date listed on Schedule 2.23 to the Seller Disclosure Letter, but only to the extent necessary to fulfill Buyer’s customers orders, including but not limited to the Acquired Contracts and Buyer’s acquired interest in the Acquired Partially Completed Contracts.  The price paid by Buyer for Seller’s  inventory shall be equal to Seller’s actual cost from Seller’s vendor of such inventory, including freight and shipping cost from Seller’s vendor for such products, and Buyer shall pay Seller for such inventory purchases on the date that Seller’s invoice is due to Seller’s vendor or finance company for Seller’s purchase of such inventory from Seller’s vendor.

2.24          Customer Payments.   Following the Closing, it is anticipated that certain customers might possibly pay the incorrect party for invoices of the other party, due to administrative error, or for other reasons.  Buyer and Seller agree to pay to the other party any payments received by one party that rightfully belong to the other party within five business days of receipt of such payment.

2.25          NetCare Monitoring Contracts . Seller has entered into the customer contracts set forth on Schedule 2.25 of the Seller Disclosure Letter (the “ Acquired NetCare Monitoring Contracts ”) relating to the provision of monitoring services under Seller’s NetCare program for which Seller has already performed a certain portion of such contracts prior to Closing, and/or Seller has already billed the customer prior to Closing for a portion of such contracts.  Seller and Buyer hereby agree that all Acquired NetCare Monitoring Contracts shall be assigned and conveyed to Buyer by Seller pursuant to this Agreement on the Closing Date.  Buyer and Seller hereby agree that an amount equal to the Completed Portion, as of the Closing Date, of all amounts due or paid by Seller’s customers in respect of such the Acquired NetCare Monitoring Contacts in respect of the month of November shall be paid to and retained by Seller and all other amounts due or paid by customers party to such Acquired NetCare Monitoring Contracts in respect of the month of November and thereafter shall be paid to and retained by Buyer.  For purpose of this Agreement, the term “ Completed Portion ” shall mean an amount equal to all amounts paid or due from customers party to such Acquired NetCare Monitoring Contracts in respect of the month of November multiplied by a fraction the numerator of which is the number of days that have elapsed in November as of the Closing Date and the denominator of which is thirty (30).    Any amounts that are due Buyer as of Closing Date pursuant to this Section 2.25 shall be offset from the Cash Consideration or any other amount owed or payable by Buyer to Seller or Shareholders under this Agreement at Closing and to the extent that any amounts owed pursuant to this Section 2.25 are identified by Buyer or Seller after the Closing Date and remain unpaid by Seller to Buyer for the performance by Buyer of the Acquired NetCare Monitoring Contracts after the Closing Date, such amounts shall be immediately paid by Seller to Buyer.

2.26         Acquired Pre-Paid Contracts .  Seller has entered into the contracts set forth on Schedule 2.26 of the Seller Disclosure Letter (the “Acquired Pre-Paid Contracts”) pursuant to which such customers of Seller have pre-paid Seller for the performance of certain services by Seller and for which Seller may have performed a portion of such contracts prior to Closing.  Seller and Buyer hereby agree that all Acquired Pre-Paid Contracts shall be assigned and conveyed to Buyer by Seller pursuant to this Agreement on the Closing Date.  Buyer and Seller further agree that the Cash Consideration portion of the initial purchase price hereunder shall be reduced at Closing by an amount equal to the value of the pre-paid portion of each Acquired Pre-Paid Contrac