Document:

ex10_1.htm

    
      
        

      

    

    
      Exhibit
10.1

      

      

      ASSET
PURCHASE AGREEMENT

      

      

      By
And Among

      

      

      INX
INC.,

      

      

      NETTEKS
TECHNOLOGY CONSULTANTS, INC.,

      

      

      ETHAN
F. SIMMONS,

      

      

      MATTHEW
J. FIELD,

      

      

      AND

      

      

      MICHAEL
P. DICENZO

      

      

      November
14, 2008

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      ASSET PURCHASE
AGREEMENT

      

      This
Asset Purchase Agreement (“Agreement”) is made
this 14th 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:

      

      ARTICLE
I.

      PURCHASE AND SALE OF
ASSETS

      

      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”)

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (g)           Name.  The
right to use the name “NetTeks Technology Consultants, Inc.” and all variants
thereof;

      

      (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.

      

      ARTICLE
II.

      ADDITIONAL
AGREEMENTS

      

      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
Contract that has not been performed by Seller as of the Closing
Date.

      

      2.27         Post-Closing
Activity of Seller.  In order to ensure that Seller meets its
financial obligations to Buyer as provided for in Sections 2.20, 2.21, 2.22,
2.24, 2.25 and 2.26 hereof following the Closing, Seller and Shareholders agree
as follows:

      

      (a)           Until
the earlier of (i) the expiration of the Escrow Period or (ii) the Buyer has
issued written instruction to the Escrow Agent to release the entire balance of
the Holdback Shares to Seller as provided for herein, Shareholders will be the
only officers, directors, employees and shareholders of Seller;

      

      (b)           Until
the earlier of (i) the expiration of the Escrow Period or (ii) the Buyer has
issued written instruction to the Escrow Agent to release the entire balance of
the Holdback Shares to Seller as provided for herein, Shareholders will cause
Seller to maintain capital sufficient to meet Seller’s obligations to Buyer
under Sections 2.20, 2.21, 2.22, 2.24, 2.25 and 2.26 hereof;

      

      (c)           Until
the earlier of (i) the expiration of the Escrow Period or (ii) the Buyer has
issued written instruction to the Escrow Agent to release the entire balance of
the Holdback Shares to Seller as provided for herein, neither Seller nor
Shareholders shall grant any Security Interest in any assets of Seller;
and

      

      (d)           Shareholders
hereby jointly and severally, personally guarantee the prompt and complete
payment of all amounts owed by Seller to Buyer under Sections 2.20, 2.21, 2.22,
2.24, 2.25 and 2.26 hereof.

      

      (e)           Shareholders
and the Seller hereby acknowledge and agree that Buyer shall have the right but
not the obligation to set-off any amount payable to Buyer by Seller or
Shareholders pursuant to Sections 2.20, 2.21, 2.22, 2.23 2.24, 2.25 or 2.26
against Additional Purchase Consideration or any amount owed or payable by Buyer
to Seller or Shareholders under this Agreement at Closing or
thereafter.

      

      ARTICLE
III.

      REPRESENTATIONS AND
WARRANTIES CONCERNING THE TRANSACTION

      

      3.1           Representations
and Warranties of Seller and Shareholders.  Seller and
Shareholders jointly and severally represent and warrant to Buyer that the
statements contained in this Section 3.1 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3.1 with respect to
itself).  Seller and Shareholders further jointly and severally
represent and warrant to Buyer as follows:

      

      (a)           Organization, Qualification,
and Corporate Power.  Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.  Seller is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect on the business, financial condition, operations, results of
operations, or future prospects of Seller.  Seller has full corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it.  Schedule 3.1(a) to the
Seller Disclosure Letter lists the shareholders, directors and officers of
Seller.  For purposes of this Agreement, the term "Material Adverse
Effect" shall mean, with respect to any Person, any change or effect that
is materially adverse to the business, assets, operations, financial condition
or results of operations or future prospects of such Person and its
subsidiaries, either separately or when taken as a whole.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)           Noncontravention.  Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Seller is
subject or any provision of the charter or bylaws of Seller or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Seller is a party or by which it is
bound or to which its assets are subject (or result in the imposition of any
Security Interest upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a Material Adverse Effect on
Seller or on the ability of the parties to consummate the transactions
contemplated by this Agreement.  Seller does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a Material Adverse Effect on Seller or on the ability of
the parties to consummate the transactions contemplated by this
Agreement.

      

      (c)           Brokers' Fees. Seller
does not have any liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.

      

      (d)           Title to Assets.
Except for the Security Interests expressly set forth on Schedule 3.1(d) to the
Seller Disclosure Letter (the “Permitted Liens”),
Seller has good and marketable title to, or a valid leasehold interest in, the
Purchased Assets, free and clear of any Security Interest.  Upon the
sale, assignment, transfer and conveyance of the Purchased Assets to Buyer
hereunder, there will be vested in Buyer good and marketable title to all
Purchased Assets, free and clear of all Security Interests other than Permitted
Liens.

      

      (e)           Financial Statements.
Attached as Schedule 3.1(e) to the Seller Disclosure Letter are the balance
sheets and statements of income, as of and for the fiscal years ended December
31, 2005, December 31, 2006 and December 31, 2007 (the “Most Recent Fiscal Year
End”) for Seller (collectively the “Financial
Statements”), which Seller represents are the true and correct balance
sheets and statements of income for such periods, and which have been prepared
on a consistent basis.

      

      (f)           Events Subsequent to Most
Recent Fiscal Year End.  Since the Most Recent Fiscal Year End,
Seller has operated consistent with past custom and practice, including with
respect to quantity and frequency and in compliance with all applicable laws and
regulations (the “Ordinary Course of
Business”); all of Seller’s financial statements for monthly periods
since the Most Recent Fiscal Year End have been prepared on a consistent basis;
and there has not been any Material Adverse Effect. Without limiting the
generality of the foregoing since that date:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (i)            no
party (including Seller) has accelerated, terminated, made material
modifications to, or canceled any material agreement, contract, lease, or
license to which any of Seller or its Affiliates is a party or by which any of
them is bound;

      

      (ii)           Seller
has not imposed any Security Interest upon any of its assets, tangible or
intangible other than Permitted Liens;

      

      (iii)          Seller
has not granted any license or sublicense of or Security Interest in any
material rights under or with respect to any Intellectual Property;

      

      (iv)          Seller
has not experienced any material damage, destruction, or loss (whether or not
covered by insurance) to the Purchased Assets;

      

      (v)           Except
as set forth on Schedule 3.1(f)(v) to the Seller Disclosure Letter, Seller has
not granted any increase in the base compensation of any of its directors,
officers, and employees outside of the Ordinary Course of Business;

      

      (vi)          Seller
has not suffered any Material Adverse Effect and no event has occurred which, so
far as reasonably can be foreseen, may result in any such Material Adverse
Effect;

      

      (vi)          Seller
has not committed to do any of the foregoing.

      

      (g)           Undisclosed
Liabilities.  Seller does not have any material liability,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for Taxes, except for
(i) Liabilities set forth on the face of the Financial Statements (rather than
in any notes thereto) and (ii) Liabilities which have arisen after the Most
Recent Fiscal Year End in the Ordinary Course of Business.

      

      (h)           Legal
Compliance.  Seller has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against it alleging any failure so to comply, except where
the failure to comply would not have a Material Adverse Effect on the Purchased
Assets.

      

      

      (i)           Tax
Matters.

      

      (i)          
 The Seller and each of its Affiliates have filed all income tax returns
that they were required to file.  All such income tax returns were
correct and complete in all material respects. All Taxes owed by Seller (whether
or not shown on any income tax return) have been paid. Seller currently is not
the beneficiary of any extension of time within which to file any income tax
return other than for the tax year 2007.

      

      (ii)           There
is no material dispute or claim concerning any liability of Seller or any of its
Affiliates for any Taxes either (A) claimed or raised by any authority in
writing or (B) as to which Seller or any director or officer of Seller has
knowledge.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (iii)          Neither
Seller nor any of its Affiliates has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to an income
tax assessment or deficiency.

      

      (iv)          The
Seller has not filed a consent under Section 341(f) of the Internal Revenue Code
concerning collapsible corporations. Seller has not made any material payments,
is not obligated to make any material payments, or is not a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Section 280G of the Internal
Revenue Code. Seller has never been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal Revenue Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Internal Revenue Code. Seller is not a party to any tax allocation or sharing
agreement. Seller (A) has never been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent of
which was Seller) or (B) does not have any liability for the Taxes of any person
(other than Seller) under Reg. §1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or
otherwise.

      

      (v)           The
Seller has withheld and paid or has sufficient cash reserved for all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to or on behalf of any employee, independent contractor, creditor, stockholder,
or other third party.

      

      (j)         
  Real
Property.

      

      (i)           
Seller does not own any real property.

      

      (ii)           Schedule
3.1(j)(ii) to the Seller Disclosure Letter lists and describes briefly all real
property leased or subleased by Seller. Seller has delivered to Buyer correct
and complete copies of the leases and subleases listed in Schedule 3.1 (j)(ii).
With respect to each material lease and sublease listed in Schedule
3.1(j)(ii):

      

      (A)           the
lease or sublease is legal, valid, binding, enforceable, and in full force and
effect in all material respects;

      

      (B)           to
the knowledge of Seller, no party to the lease or sublease is in material breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination, modification, or
acceleration thereunder;

      

      (C)           no
party to the lease or sublease has repudiated any material provision
thereof;

      

      (D)           there
are no material disputes, oral agreements, or forbearance programs in effect as
to the lease or sublease;

      

      (E)           Seller
has not assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold or subleasehold; and

      

      (F)           to
the knowledge of Seller, all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including material licenses
and permits) required in connection with the operation thereof, and have been
operated and maintained in accordance with applicable laws, rules, and
regulations in all material respects.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (k)           Intellectual
Property.

      

      (i)           Neither
Seller nor any of its Affiliates has interfered with, infringed upon,
misappropriated, or violated any intellectual property rights of third parties
in any material respect, and Seller has never received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Seller or any of its
Affiliates must license or refrain from using any intellectual property rights
of any third party). No third party has interfered with, infringed upon,
misappropriated, or violated any intellectual property rights of Seller in any
material respect.

      

      (ii)           Schedule
3.1(k)(ii) to the Seller Disclosure Letter identifies each patent or
registration which has been issued to Seller with respect to any of its
intellectual property, identifies each pending patent application or application
for registration which Seller has made with respect to any of its intellectual
property, and identifies and describes each material license, agreement, or
other permission which Seller has granted to any third party with respect to any
of its intellectual property (together with any exceptions). Seller has
delivered to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date).  Schedule 3.1(k)(ii) also identifies each domain name,
universal resource locator, trademark, service mark, trade name, copyright or
unregistered trademark used by Seller in connection with Seller’s Business. With
respect to each item of intellectual property required to be identified in
Schedule 3.1(k)(ii):

      

      (A)           Seller
possesses all right, title, and interest in and to the item, free and clear of
any Security Interest, licenses, or other restrictions;

      

      (B)           the
item is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;

      

      (C)           no
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or, to the knowledge of Seller, threatened which challenges
the legality, validity, enforceability, use, or ownership of the item;
and

      

      (D)           Seller
has not agreed to indemnify any person for or against any interference,
infringement, misappropriation, or other conflict with respect to the
item.

      

      (iii)           Schedule
3.1(k)(iii) to the Seller Disclosure Letter identifies each material item of
intellectual property that any third party owns and that Seller uses pursuant to
license, sublicense, agreement, or permission, other than commercially available
shrink-wrap software license agreements for off-the-shelf software products
entered into by Seller in the ordinary course of business. Seller has delivered
to Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item of
intellectual property required to be identified in Schedule
3.1(k)(iii):

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (A)           the
license, sublicense, agreement, or permission covering the item is legal, valid,
binding, enforceable, and in full force and effect in all material
respects;

      

      (B)           no
party to the license, sublicense, agreement, or permission is in material breach
or default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default or permit termination, modification, or
acceleration thereunder;

      

      (C)           no
party to the license, sublicense, agreement, or permission has repudiated any
material provision thereof; and

      

      (D)           Seller
has not granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.

      

      (iv)           Seller
has secured valid written assignments of intellectual property rights from all
independent contractors, consultants and employees who contributed to the
creation or development of the Purchased Assets that Seller does not already own
by operation of law.

      

      (v)    Seller has
taken all necessary and appropriate steps to protect and preserve the
confidentiality of all proprietary Purchased Assets not otherwise protected by
patents, patent applications or copyrights.  All use, disclosure or
appropriation of all assets owned by Seller or licensed to Seller by a third
party have been pursuant to the terms of a written agreement between Seller, on
the one hand, and such third party, on the other hand.

      

      (vi)           to
the best knowledge of Seller, no employee of Seller is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee’s best
efforts to promote the interests of Seller and no employee of Seller was hired
in tortuous interference with an employment arrangement.

      

      (l)           Inventory;
Contracts.

      

      (i)           To
the best of Seller’s knowledge, the Inventory (a) consists of items which are in
all material respects free of any defect, fault, imperfection, impurity or
dangerous propensity of any kind, (b) is of a quality and quantity usable and
salable in the ordinary and usual course of business and (c) is owned by
Seller.

      

      (ii)           There
are no contracts or other agreements to which Seller is a party that in any way
burdens or otherwise effects any of the Purchased Assets, restricts Seller’s use
of any of the Purchased Assets for their intended purpose or obligates Seller to
pay any other party based on Seller’s ownership and use of the Purchased
Assets.

      

      (iii)           Seller
has delivered to Buyer all contracts and other agreements to which Seller is a
party and that are included in the Purchased Assets (subject only to the receipt
of all necessary consents to the assignment of such contracts and agreements to
Buyer), including:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (A)           any
agreement (or group of related agreements) for the lease of real or personal
property to or from any Person providing for lease or rental
payments;

       

      (B)           all
customer contracts related to the Seller’s Business as of the date of this
Agreement;

       

      (C)           any
agreement or group of related agreements for the sale of supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year from the
date of such agreement or from the date of this Agreement;

       

      (D)           any
agreement concerning a partnership or joint venture;

       

      (E)           any
agreement or group of related agreements under which Seller created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or any capitalized
lease obligation, or under which Seller has imposed an encumbrance of any kind
on any of the Purchased Assets, tangible or intangible;

       

      (F)           any
agreement concerning confidentiality or non-competition with respect to the
Seller’s Business; and

       

      (G)           any
agreement under which the consequences of a default or termination could
possibly have a Material Adverse Effect on the Seller’s Business.

      

      With
respect to each of the contracts and / or agreements mentioned above in this
Section 3.1(l), (1) the agreement is legal, valid, binding, enforceable, and in
full force and effect; (2) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby, subject to the receipt
of all necessary consents to the assignment of such agreements to Buyer to the
extent such agreements may be assigned, and, with respect to enforcement, except
as such enforcement may be limited by bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and to general
principles of equity, (3) Seller is not in breach or default, and no other party
is in breach or default, under the agreement, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (4) Seller
has not repudiated and no other party has repudiated, any provision of the
agreement.   Seller makes no warranty to Buyer regarding the
assignability of any individual contract and/or agreement other than as
indicated by the specific terms and/or conditions set forth
therein.  However, Seller and Shareholder agree to use reasonable
commercial efforts to assist Buyer in securing assignment of the contracts
and/or agreements mentioned above in this Section 3.1(l).

       

      (m)           [INTENTIONALLY
OMITTED]

      

      (n)           Litigation. Schedule
3.1(n) to the Seller Disclosure Letter sets forth each instance in which Seller
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the knowledge of Seller, is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.

      

      (o)           Employees. To the
knowledge of Seller, no executive, key employee, or significant group of
employees plans to terminate employment with Seller, except as contemplated by
consummation of the transaction provided for in this Agreement. Seller is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strike or material grievance, claim of unfair labor practices, or other
collective bargaining dispute within the past three years.  Seller has
not committed any material unfair labor practice. Neither Seller nor any of the
directors and officers of Seller has any knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of Seller.  Schedule 3.1(o) to the Seller
Disclosure Letter sets forth a true and complete list of:  (i) the
names, title and current salaries of all officers of Seller; (ii) the wage rates
(or wages if applicable) for each exempt and nonexempt, salaried and hourly
employees of Seller; (iii) all scheduled or contemplated increases in
compensation or bonuses; and (iv) all scheduled or contemplated employee
promotions.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (p)           Employee
Benefits.

      

      (i)         
  Schedule 3.1(p) to the Seller Disclosure Letter lists any plan,
program, arrangement, agreement or commitment which is an employment,
consulting, non-competition or deferred compensation agreement, or an executive
compensation, incentive bonus or other bonus, employee pension, profit sharing,
savings, retirement, stock option, stock purchase, stock appreciation rights,
severance pay, life, health, disability or accident insurance plan,
corporate-owned or key-man life insurance or other employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”) that Seller
maintains or to which Seller contributes or has any obligation to contribute
(each an “Employee
Benefit Plan”).

      

      (A)           Each
Employee Benefit Plan (and each related trust, insurance contract, or fund)
complies in form and in operation in all material respects with the applicable
requirements of ERISA, the Internal Revenue Code of 1986, as amended (the “Internal Revenue
Code”), and other applicable laws.

      

      (B)           All
required reports and descriptions (including Form 5500 Annual Reports, summary
annual reports, PBGC-l's, and summary plan descriptions) have been timely filed
and distributed appropriately with respect to each Employee Benefit
Plan.  The requirements of COBRA have been met in all material
respects with respect to each Employee Benefit Plan which is an Employee Welfare
Benefit Plan (as defined in ERISA §3(1)).

      

      (C)           All
contributions (including all employer contributions and employee salary
reduction contributions) which are due have been paid to each Employee Benefit
Plan which is an Employee Pension Benefit Plan (as defined in ERISA §3(2)) and
all contributions for any period ending on or before the Closing Date which are
not yet due have been paid to each Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of Seller. All premiums or other
payments for all periods ending on or before the Closing Date have been paid
with respect to each Employee Benefit Plan which is an Employee Welfare Benefit
Plan.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (D)           Each
Employee Benefit Plan which is an Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Internal Revenue Code §401(a), has
received, within the last two years, a favorable determination letter from the
Internal Revenue Service that it is a "qualified plan," and Seller is not aware
of any facts or circumstances that could result in the revocation of such
determination letter.

      

      (E)           The
market value of assets under each Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan, as defined in ERISA §3
(37)) equals or exceeds the present value of all vested and nonvested
liabilities thereunder determined in accordance with the Pension Benefit
Guaranty Corporation (“PBGC”) methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.

      

      (F)           Seller
has delivered to Buyer correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts, and other funding agreements
which implement each Employee Benefit Plan.

      

      (ii)           With
respect to each Employee Benefit Plan that Seller and any ERISA affiliate
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:

      

      (A)           No
Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated or been the
subject of a reportable event as to which notices would be required to be filed
with the PBGC. No proceeding by the PBGC to terminate any Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted or
threatened.

      

      (B)           There
have been no prohibited transactions with respect to any Employee Benefit Plan.
No fiduciary has any Liability for material breach of fiduciary duty or any
other material failure to act or comply in connection with the administration or
investment of the assets of any Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the administration or the
investment of the assets of any Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened.

      

      (C)           Seller
has not incurred any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal liability as defined
in ERISA §4201) or under the Internal Revenue Code with respect to any Employee
Benefit Plan which is an Employee Pension Benefit Plan.

      

      (iii)           Seller
does not contribute to, has never contributed to, and never has been required to
contribute to any multiemployer plan or has any Liability, including any
withdrawal liability (as defined in ERISA §4201), under any Multiemployer
Plan.

      

      (iv)           Except
as otherwise disclosed on Schedule 3.1(p) to the Seller Disclosure Letter,
Seller does not maintain and has never maintained or contributed, or ever has
been required to contribute to any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their dependents
(other than in accordance with COBRA).

      

      (q)           Guaranties.  Seller
is not a guarantor of, nor is Seller otherwise responsible for, any Liability of
any other Person.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (r)           Authorization of
Transaction. Seller has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.  Each
Shareholder has full legal capacity to enter into, execute and deliver this
Agreement, to fully perform his obligations hereunder.  This Agreement
constitutes the valid and legally binding obligation of Seller and Shareholders,
enforceable in accordance with its terms and conditions, except (i) as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other laws of general application now or hereafter in effect relating to the
rights and remedies of creditors, and (ii) that the availability of the remedy
of specific performance or of injunctive or other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.  Neither Seller nor any
shareholder needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement.

      

      (s)           Tangible
Assets.  Except as set forth in Schedule 3.1(s) to the Seller
Disclosure Letter, the Purchased Assets are free from defects (patent and
latent), have been maintained in accordance with normal industry practice, are
in good operating condition and repair (subject to normal wear and tear), and
are suitable for the purposes for which it presently is used and presently is
proposed to be used. The Personal Property items listed on Schedule 1.1(a) to
the Seller Disclosure Letter are substantially all of the tangible assets that
are being used by Seller to operate the Seller’s Business.

      

      (t)           Environmental
Matters.

      

      (i)          
 Except as set forth in Schedule 3.1(t) to the Seller Disclosure Letter or
in compliance with applicable Environmental Laws, (A) to the best of Seller’s
and Shareholders’ knowledge, Seller has never generated, transported, used,
stored, treated, disposed of or managed any Hazardous Waste (as defined below);
(B) while Seller has leased the real property listed on Schedule 3.1(j)(ii) to
the Seller Disclosure Letter, no Hazardous Material (as defined below) has ever
been spilled, released or disposed of at the real property listed on Schedule
3.1(j)(ii), or has ever been located in the soil or groundwater at any such
property; (C) while Seller has leased the real property listed on Schedule
3.1(j)(ii), no Hazardous Material has ever been transported from any real
property listed on Schedule 3.1(j)(ii) for treatment, storage or disposal at any
other place; (D) to the best of Seller’s and Shareholders’ knowledge, Seller
does not presently own, operate, lease or use any site on which underground
storage tanks are located; and (E) while Seller has leased the real property
listed on Schedule 3.1(j)(ii), no Security Interest has ever been imposed by any
governmental agency on any of the Purchased Assets as a result of the violations
of Environmental Laws (as defined below).

      

      (ii)           Except
as set forth in Schedule 3.1(t) to the Seller Disclosure Letter, (A) Seller has
no material liability under, nor has it ever violated, any Environmental Law (as
defined below) with respect to any property listed on Schedule 3.1(j)(ii) to the
Seller Disclosure Letter; (B) each property listed on Schedule 3.1(j)(ii) and
any facilities and operations thereon, are presently in compliance with all
applicable Environmental Laws; (C) Seller has never entered into or been subject
to any judgment, consent decree, compliance order or administrative order with
respect to any environmental or health and safety matter or received any request
for information, notice, demand letter, administrative inquiry or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (D) Seller has no
reason to believe that any of the items enumerated in clause (C) of this
Subsection will be forthcoming.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (iii)           Except
as set forth in Schedule 3.1(t) to the Seller Disclosure Letter, to the
knowledge of Seller, no property listed on Schedule 3.1(j)(ii) to the Seller
Disclosure Letter contains any asbestos or asbestos-containing material, any
polychlorinated biphenyls (“PCB”s) or equipment
containing PCBs, or any urea formaldehyde foam insulation.

      

      (iv)           Seller
shall provide to Buyer, at or prior to the Closing, copies of all documents,
records, and information available to it concerning any environmental or health
and safety matter relevant to Seller regarding any of the property listed on
Schedule 3.1(j)(ii) to the Seller Disclosure Letter, whether generated by Seller
or others, including, without limitation, environmental audits, environmental
risk assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans and reports, correspondence, permits,
licenses, approvals, consents and other authorizations related to environmental
or health and safety matters issued by any governmental agency.

      

      (v)           For
purposes of this Section 3.1(t), (i) “Hazardous Material”
shall mean and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant, contaminant or
other substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) “Hazardous Waste”
shall mean and include any hazardous waste as defined or regulated under any
Environmental Law; and (iii) “Environmental Law”
shall mean any environmental or health and safety-related law, regulation, rule,
ordinance or bylaw at the foreign, federal, state or local level, whether
existing as of the date hereof, previously enforced or subsequently
enacted.

      

      (u)           Consents.  Except
as set forth on Schedule 3.1(u), no consent of any third party is required to be
obtained by Seller for the execution, delivery and performance of this
Agreement, (i) the Assignment, Bill of Sale and Assumption Agreement, dated as
of the  Agreement Date, between Buyer and Seller in the form attached
hereto as Exhibit
B (the “Assignment
Agreement”), (ii) each of the Employment Agreements, dated as of the
Agreement Date, between Buyer and each Shareholder, respectively in the form
attached hereto as Exhibit C (the “Employment
Agreements”) or (iii) each of the Lock-Up Agreements, dated as of the
Agreement Date, between Buyer and each Shareholder and Seller, respectively in
the form attached hereto as Exhibit D (the “Lock-Up Agreements”
and collectively, the “Ancillary
Agreements”) or the consummation of the transactions contemplated hereby
or thereby.

      

      (v)           Disclosure.  This
Agreement and the schedules, attachments, written statements, documents,
certificates, or other items prepared or supplied to Buyer by or on behalf of
Seller with respect to the transactions contemplated in this Agreement are
correct, complete and authentic, and all contracts and other agreements or
instruments included thereunder are valid, subsisting and binding on the parties
thereto in accordance with their terms.  Neither this Agreement, nor
any other Ancillary Agreement nor any of the schedules, attachments, written
statements, documents, certificates, or other items prepared or supplied to
Buyer by or on behalf of Seller with respect to the transactions contemplated in
this Agreement (the “Transaction
Documents”) contain any untrue statement of a material fact or omit a
material fact necessary to make each statement contained herein or therein not
misleading.  Neither Seller nor any responsible officer or manager or
Shareholders have intentionally concealed any fact known by such person to have
a Material Adverse Effect.  There is no fact known by Seller or
Shareholders not disclosed in writing to Buyer by Seller or Shareholders that
materially and adversely affects, or so far as may reasonably be foreseen by the
Seller could materially and adversely affect, the Purchased Assets, the
condition of their commercialization or the ability of Seller or Shareholders to
perform the transactions contemplated by this Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (w)           Investor
Qualifications.

      

      (i)           Seller
understands that any shares of Buyer Common Stock to be received in partial
payment of the purchase price are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being received from Buyer in a
transaction not involving a public offering, are being offered and sold without
registration under the Securities Act of 1933, as amended (the “Securities Act”), in
a private placement that is exempt from the registration provisions of the
Securities Act and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act only in
limited circumstances.  Seller understands that it must bear the
economic risk of the acquisition of the Buyer Common Stock made in connection
herewith for an indefinite period of time because, among other reasons, the
shares of Buyer Common Stock issued to Seller hereunder will not have been
registered under the Securities Act or under the securities laws of certain
states and, therefore, cannot be resold, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under the
applicable securities laws of such states or an exemption from such registration
is available.  Seller further understands that the certificate
representing the shares of Buyer Common Stock shall bear a legend in
substantially the following form:

      

      "THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER AND COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS";

      

      (ii)           Seller
can bear the economic risk of its investment in the Buyer Common Stock and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and the risks of the investment in
Buyer.  Seller understands that the per share value of the Buyer
Common Stock may fluctuate from time to time and that the per share value of the
Buyer Common Stock at the time of Closing or at the time of issuance to Seller
is not a representation by Buyer that Seller could now or at any time in the
future receive such per share amount in connection with any transaction
involving the Buyer Common Stock.  Seller has been furnished with all
materials relating to the business, finances and operations of Buyer which have
been requested, including, without limitation all certificates, instruments,
agreements and other documents defining the rights, limitations and preferences
of the Buyer Common Stock.  Seller has conducted its own investigation
of Buyer and is not relying on any representations or warranties of Buyer other
than those expressly set forth herein.  Seller understands that Buyer
is under no obligation to register the Buyer Common Stock on Seller’s
behalf;

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (iii)           Seller
is acquiring the Buyer Common Stock for its own account with the present
intention of holding such securities for purposes of investment, and that it has
no intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws;
and

      

      (iv)           Seller
is an "accredited investor" within the meaning of the Securities and Exchange
Commission's Rule 501 of Regulation D under the Securities Act, as presently in
effect.

      

      3.2           Representations
and Warranties of Buyer. Buyer represents and warrants to Seller that the
statements contained in this Section 3.2 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3.2), except as set forth in Schedule 3.2
to the Seller Disclosure Letter.

      

      (a)           Organization of
Buyer. Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation.

      

      (b)           Authorization of
Transaction. Buyer has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder.  The shares of Buyer Common Stock issued by
Seller as Stock Consideration when issued in accordance with the terms and
conditions of this Agreement will be validly issued, fully
paid,  non-assessable and not otherwise pledged to any third party.
This Agreement constitutes the valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms and conditions, except as
enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
rights of creditors generally and (ii) the effect of rules of law governing
the availability of equitable remedies. Buyer need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.

      

      (c)           Noncontravention.
Neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Buyer is subject, or any provision of Buyer’s charter or bylaws or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party or by which it is
bound or to which any of its assets is subject.

      

      (d)           Brokers' Fees. Buyer
has no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Seller could become liable or obligated.

      

      (e)           No Other
Representations or Warranties.  Buyer hereby
acknowledges that with the exception of Seller’s and Shareholders’
representations and warranties set forth in the Transaction Documents, Seller
and Shareholders make no other representations or warranties, express or
implied, to Seller with respect to the Purchased Assets.

      

      

      ARTICLE
IV. 

      COVENANTS OF SELLER AND THE
SHAREHOLDERS

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Seller
and Shareholders jointly and severally covenant and agree with Buyer as
follows:

      

      4.1           Consummation of
Agreement.  Seller shall use
commercially reasonable efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out.

      

      4.2           Satisfaction of
Conditions.  Seller will use
reasonable efforts to obtain as promptly as practicable the satisfaction of the
conditions to Closing set forth in Article VI and any necessary consents or
waivers under or amendments to leases and other contracts by which Seller is
bound.

      

      4.3           Notices and
Consents.  Seller will give any notices to, make any filings
with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies.

      

      4.4           Regular Course of
Business.  Between the date
of this Agreement and the Closing Shareholders will not cause or permit Seller
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business.  Further, Shareholders will
cause Seller to operate Seller’s Business in accordance with the reasonable
judgment of its management diligently and in good faith, consistent with past
management practices, and continue to use its reasonable efforts to keep
available the services of present officers and employees (other than planned
retirements) and to preserve its present relationships with persons having
business dealings with it.  Shareholders will not cause or permit
Seller to take any actions which would require a supplement or amendment to the
items required to be disclosed pursuant to Section 3.1.  Further,
between the date of this Agreement and the Closing Date, Seller
will:

      

      (a)           communicate
regularly with Buyer and keep Buyer closely advised of any material developments
relating to Seller and the Purchased Assets;

      

      (b)           pay
all of its trade accounts payable as they become due in the Ordinary Course of
its Business;

      

      (c)           maintain
its books and records in the usual, regular and ordinary manner, on a basis
consistent with prior periods, and will comply with all laws applicable to
each;

      

      (d)           keep
and maintain all approvals, authorizations, consents, licenses, domain name
registrations, operating authorities, certificates of public convenience, orders
and other permits in full force and effect, continue to operate Seller’s
Business pursuant to such approvals, authorizations, consents, licenses,
operating authorities, certificates of public convenience, orders and other
permits and take all steps necessary to meet requirements on pending
applications for approvals, authorizations, consents, licenses, operating
authorities, certificates of public convenience, orders and permits;
and

      

      (e)           not
increase the discounts or other sales promotions it offers to customers over the
discounts and promotions offered by Seller during the 3 month period immediately
preceding the date of this Agreement.

      

      4.5           Preservation of
Business.  Seller agrees
that the Purchased Assets will be used, preserved, and maintained, as far as
practicable, in the Ordinary Course of Business, to the same extent and in the
same condition as said assets, property, and rights are used, preserved and
maintained on the date of this Agreement, and no unusual or novel methods of
purchase, sale, management, or operation of said Purchased Assets or Seller’s
Business will be made or instituted.  Without the prior consent of
Buyer, Seller will not encumber any of the Purchased Assets or make any
commitments relating to such assets, property, or business, except in the
Ordinary Course of Business.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.6           Insurance.  Seller will keep
or cause to be kept in effect and undiminished the insurance now in effect on
its various properties and assets, and will purchase such additional insurance,
at Buyer's cost, as Buyer may request.

      

      4.7           Employees.  Seller will not
grant to any employee of Seller any promotion, any increase in compensation, or
any bonus or other award other than promotions, increases, or awards that are
regularly scheduled in the Ordinary Course of Business or contemplated on the
date of this Agreement or that are, in the reasonable judgment of management of
Seller, in its best interest.

      

      4.8           No
Violations.  Seller will
comply in all material respects with all statutes, laws, ordinances, rules, and
regulations applicable to Seller’s Business.

      

      4.9           Public
Announcements.  Shareholders will
not and will cause Seller not to issue any press release or other announcement
to the employees, customers, or suppliers of Seller related to this Agreement or
this purchase without the approval of Buyer, unless required by law, in which
case Buyer and Seller will consult with each other regarding the
announcement.  Buyer will provide written approval of communications
to Seller’s employees, customers or suppliers necessary to affect the
transaction contemplated by this Agreement.

      

      4.10         Company
Examinations and Investigations.  Prior to the
Closing Date, Seller agrees that Buyer shall be entitled, through its employees
and representatives, including, without limitation, its attorneys and
accountants, to make such investigation of Seller and such examination of the
books, records and financial condition of Seller as Buyer reasonably
desires.  Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances and Seller shall cooperate
fully therein.  In order that Buyer may have full opportunity to make
such business, accounting and legal review, examination or investigation as it
may wish of the business and affairs of Seller, Seller shall furnish the
representatives of Buyer during such period with all such information concerning
the affairs of Seller as such representatives may reasonably request and cause
its officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with such representatives in connection with such review and
examination and to make full disclosure to Buyer of all material facts affecting
the financial condition and business operation of Seller.

      

      4.11         Continued
Effectiveness of Representations and Warranties of Seller.  From the date
hereof through the Closing Date, Seller shall conduct its Seller’s Business in a
commercially reasonable manner and in such a manner so that the representations
and warranties contained in Section 3.1 shall continue to be true and correct on
and as of the Closing Date as if made on and as of the Closing
Date.

      

      4.12         Supplements to
Schedules.  From time to time
prior to the Closing, Seller will promptly supplement or amend the disclosure
schedules with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in any schedule and will promptly notify Buyer of any breach
by Seller that it discovers of any representation, warranty, or covenant
contained in this Agreement.  No supplement or amendment of any
Schedule made pursuant to this section will be deemed to cure any breach of any
representation of or warranty made in this Agreement unless Buyer specifically
and reasonably agrees thereto in writing.

      

      4.13         No
Solicitation.  Until the Closing
or termination pursuant to Article VIII of this Agreement, neither Seller nor
any of its directors, officers, employees, or agents shall, directly or
indirectly, encourage, solicit, initiate, or enter into any discussions or
negotiations concerning any disposition of any of the capital stock or all or
substantially all of the assets of Seller (other than pursuant to this
Agreement), or any proposal therefor, or furnish or cause to be furnished any
information concerning Seller to any party in connection with any transaction
involving the acquisition of the capital stock or the Purchased Assets of Seller
by any person other than Buyer.  Seller will promptly inform Buyer of
any inquiry (including the terms thereof and the person making such inquiry)
received by any responsible officer or director of Seller after the date hereof
and believed by such person to be a bona fide, serious inquiry relating to any
such proposal.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      4.14         Loss or
Threatened Loss of Customer or Supplier.  Other than as set
forth on Schedule 4.14, prior to the Closing, Seller shall promptly notify Buyer
in the event of a loss or threatened loss of any material supplier, customer or
affiliate of Seller, and shall cause employees of Seller to be made available to
call upon such customer, supplier or affiliate, together with Buyer to assist
Buyer in regaining or retaining such customer, supplier or
affiliate.

      

      4.15         Notice of
Developments.  Seller will give
prompt written notice to Buyer of any material development causing a breach of
any of its own representations and warranties in Section 3.1 above.

      

      ARTICLE
V.

      COVENANTS OF
BUYER

      

      Buyer
covenants and agrees with Seller as follows:

      

      5.1           Efforts of
Buyer.  Buyer shall use
commercially reasonable efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out.

      

      5.2           Public
Announcements.  Subject to
applicable law, at all times Buyer will promptly advise, and obtain the approval
of, Seller before issuing or permitting any of Buyer’s directors, officers,
employees, representatives, agents or subsidiaries to issue any press release
with respect to this Agreement or the transactions contemplated
hereby.

      

      5.3           Notices and
Consents.  Buyer will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies.

      

      5.4           Notice of
Developments.  Buyer will give
prompt written notice to Seller of any material development causing a breach of
any of its own representations and warranties in Section 3.2 above.

      

      ARTICLE
VI.

      CONDITIONS TO BUYER’S
OBLIGATIONS

      

      Each and
every obligation of Buyer under this Agreement is subject to the satisfaction,
at or before the Closing, of each of the following conditions:

      

      6.1           Representations
and Warranties; Performance.  Each of the
representations and warranties made by Seller and Shareholders herein will be
true and correct in all material respects as of the Closing with the same effect
as though made at that time except for changes specifically contemplated,
permitted, or required by this Agreement; Seller will have performed and
complied with all agreements, covenants, and conditions required by this
Agreement to be performed and complied with by it prior to the Closing; and
Buyer will have received, at the Closing, a certificate of the Chief Executive
Officer of Seller, signed on behalf of Seller, stating that each of the
representations and warranties made by Seller herein is true and correct in all
material respects as of the Closing except for changes contemplated, permitted,
or required by this Agreement and that Seller has performed and complied with
all agreements, covenants, and conditions required by this Agreement to be
performed and complied with by it prior to the Closing.  For the
purposes of this section and determining whether a provision has been breached
in a material respect, any representation or warranty of a party that is
qualified by a materiality standard shall be read without regard to any such
materiality qualification as if such qualification were not contained
herein.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.2           Litigation.  No material
action, suit, or proceeding before any court, governmental or regulatory
authority will have been commenced and be continuing, and no investigation by
any governmental or regulatory authority will have been commenced and be
continuing, and no action, investigation, suit, or proceeding will be threatened
at the time of Closing, against Seller, Shareholders, Buyer or any of their
Affiliates, associates, officers, managers or directors, seeking to restrain,
prevent, or change the transactions contemplated hereby, questioning the
validity or legality of the transactions contemplated hereby, or seeking damages
in connection with the transactions contemplated hereby.

      

      6.3           Absence of
Material Change.  From the date of
this Agreement to the Closing, there shall not have occurred any event, change,
effect, act, discovery, or occurrence (or any combination of the forgoing)
(whether or not referred to or described herein or in any Exhibit or Schedule
hereto) that individually or in the aggregate would have, or would reasonably be
expected to have, a Material Adverse Effect.

      

      6.4           Company
Action.  Seller will have
furnished to Buyer a copy, certified by an officer of Seller, of the resolutions
of the Board of Directors of Seller and the shareholders of Seller authorizing
the execution, delivery and performance of this Agreement.

      

      6.5           Consents.  Seller shall have
made all filings with and notifications of governmental authorities and
regulatory agencies required to be made by it in connection with the execution
and delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of Seller’s business by Buyer subsequent to
the Closing, and Buyer shall have received such governmental consents or permits
required to use and own the Purchased Assets, if any.

      

      6.6           Release
of Liens.  All Security
Interests on the Purchased Assets, other than Permitted Liens, shall have been
terminated and released, and Buyer shall have received releases and such other
documents evidencing such transactions.

      

      6.7           Assignment, Bill
of Sale and Assumption Agreement.  Seller shall have
executed and delivered an Assignment Agreement .

      

      6.8           Employment
Agreements.  Buyer (or Buyer’s
affiliate) and Shareholders and other Key Employees and each other employee of
Seller that has been extended an offer of employment with Buyer or Buyer’s
affiliate shall each have executed and delivered Buyer’s or Buyer’s affiliate’s
form of Employment Agreement.

      

      6.9           Confidentiality,
Development and Non-Interference Agreement.  Buyer (or Buyer’s
affiliate) and Shareholders and other Key Employees and each other employee of
Seller that has been extended an offer of employment with Buyer or Buyer’s
affiliate shall have executed and delivered Buyer’s or Buyer’s affiliate’s form
of Confidentiality, Development and Non-Interference Agreement.

      

      6.10         Lock-Up
Agreement.  Seller and the
Shareholders shall each have executed and delivered Buyer’s form of Lock-Up
Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.11         Legal Opinion of
Seller’s Counsel.  Buyer shall have
received an opinion of Seller’s legal counsel, Gleason & Gleason, in a form
acceptable to Buyer.

      

      

      ARTICLE
VII.

      CONDITIONS TO SELLER’S
OBLIGATIONS

      

      Each and
every obligation of Seller under this Agreement is subject to the satisfaction,
at or before the Closing, of each of the following conditions:

      

      7.1           Representations
and Warranties; Performance.  Each of the
representations and warranties made by Buyer herein will be true and correct in
all material respects as of the Closing with the same effect as though made at
that time except for changes contemplated, permitted, or required by this
Agreement; Buyer will have performed and complied with all agreements,
covenants, and conditions required by this Agreement to be performed and
complied with by it prior to the Closing; and Seller will have received, at the
Closing, a certificate of Buyer, stating that each of the representations and
warranties made by Buyer herein is true and correct in all material respects as
of the Closing except for changes contemplated, permitted, or required by this
Agreement and that Buyer has performed and complied with all agreements,
covenants, and conditions required by this Agreement to be performed and
complied with by it prior to the Closing. For the purposes of this section and
determining whether a provision has been breached in a material respect, any
representation or warranty of a party that is qualified by a materiality
standard shall be read without regard to any such materiality qualification as
if such qualification were not contained herein.

      

      7.2           Corporate
Action.  Buyer will have
furnished to Seller a copy, certified by an officer of Buyer, of the resolutions
of the Board of Directors of Buyer authorizing the execution, delivery, and
performance of this Agreement.

      

      7.3           Absence
of Material
Change.  From the date of
this Agreement to the Closing, there has not occurred any event, change, effect,
act, discovery, or occurrence (or any combination of the forgoing) (whether or
not referred to or described herein or in any Exhibit or Schedule hereto) that
individually or in the aggregate would have, or would reasonably be expected to
have, a Material Adverse Effect.

      

      7.4           Assignment, Bill
of Sale and Assumption Agreement.  Buyer shall have
executed and delivered an Assignment Agreement.

      

      7.5           Purchase
Price.  Buyer shall have
tendered delivery of the purchase price set forth in Section 1.6 to
Seller.

      

      7.6           Employment
Agreements. Buyer shall have executed and delivered to each of the
Shareholders the Employment Agreements.

       

      7.7           Litigation.  No material
action, suit, or proceeding before any court, governmental or regulatory
authority will have been commenced and be continuing, and no investigation by
any governmental or regulatory authority will have been commenced and be
continuing, and no action, investigation, suit, or proceeding will be threatened
at the time of Closing, against Buyer or any of its  Affiliates,
associates, officers, managers or directors, seeking to restrain, prevent, or
change the transactions contemplated hereby, questioning the validity or
legality of the transactions contemplated hereby, or seeking damages in
connection with the transactions contemplated hereby.

      

      ARTICLE
VIII.

      TERMINATION

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      8.1           Termination By
Buyer.  Buyer may
terminate this Agreement by giving written notice to Seller at any time prior to
the Closing (a) in the event Seller or any Shareholder has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Buyer has notified Seller and Shareholders of the breach, and
the breach has continued without cure for a period of 15 days after the notice
of breach or is otherwise not reasonably susceptible to cure or (b) if the
Closing shall not have occurred on or before June 30, 2008 by reason of the
failure of any condition precedent under Article VI hereof (unless the failure
results primarily from Buyer breaching any representation, warranty, or covenant
contained in this Agreement).  For the purposes of this section and
determining whether a provision has been breached in a material respect, any
representation or warranty of a party that is qualified by a materiality
standard shall be read without regard to any such materiality qualification as
if such qualification were not contained herein.

      

      8.2           Termination By
Seller.  Seller may
terminate this Agreement by giving written notice to Buyer at any time prior to
the Closing (a) in the event Buyer has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, Seller has
notified Buyer of the breach, and the breach has continued without cure for a
period of 15 days after the notice of breach or is otherwise not reasonably
susceptible to cure or (b) if the Closing shall not have occurred on or before
December 31, 2008  by reason of the failure of any condition precedent
under Article VII hereof (unless the failure results primarily from Seller
breaching any representation, warranty, or covenant contained in this
Agreement). For the purposes of this section and determining whether a
representation or warranty has been breached in a material respect, any
representation or warranty of a party that is qualified by a materiality
standard shall be read without regard to any such materiality qualification as
if such qualification were not contained herein.

      

      8.3           Termination By
Mutual Consent.  Anything herein
or elsewhere to the contrary notwithstanding, this Agreement may be terminated
and abandoned at any time prior to the Closing without further obligation or
liability on the part of any party by the mutual written consent of Buyer and
Seller.

      

      8.4           Effect of
Termination.  If this Agreement
terminates pursuant to any provision of this Article VIII and the transactions
contemplated hereunder are not consummated, this Agreement shall be null and
void and have no further force or effect, except that any such termination shall
be without prejudice to the rights of any party on account of the
nonsatisfaction of the conditions set forth in Articles VI and VII resulting
from the breach or violation of the representations, warranties, covenants or
agreements of another party under this Agreement.

      

      ARTICLE
IX.

      INDEMNIFICATION

      

      9.1          
Survival.  Each
covenant or agreement in this Agreement shall survive the Closing without
limitation as to time until fully performed in accordance with its terms and
each representation and warranty in this Agreement, any Transaction Document or
in the Schedules or Exhibits shall survive the Closing until the twelve-month
anniversary of the Closing Date (the “Survival
Date”).  Notwithstanding the foregoing, the following
representations and warranties (collectively, the “Specified
Representations”) shall survive the Closing as follows:  (a)
the representations and warranties contained in Sections 3.1(a), (b), (c), (d),
(g) and (r), and 3.2 shall survive the Closing without limitation as to time,
and (b) the representations and warranties contained in Sections 3.1(i), 3.1(p)
and 3.1(t) shall survive the Closing until 30 days after the expiration of the
statutes of limitations, if any, applicable to the matters addressed
therein.  

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      9.2           Indemnification by Seller and
Shareholders.  From and after
the date hereof, Seller and Shareholders agree, jointly and severally, to
indemnify fully, hold harmless, protect and defend Buyer and its Affiliates, and
their respective directors, officers, agents and employees, successors and
assigns from and against:

      

      (a)          
any and all Losses (as defined below) incurred by any of them arising out of,
relating to or based upon any inaccuracy in, or breach of, any of the
representations or warranties of any of Seller or Shareholders contained in this
Agreement, any Transaction Document or in the Schedules or Exhibits hereto or
thereto;

      

      (b)          
any and all Losses incurred by any of them arising out of, relating to or based
upon any failure to perform, or other breach of, any of the covenants or
agreements of any of Seller or Shareholders contained in or incorporated into
this Agreement, any Transaction Document or in the Schedules or Exhibits hereto
or thereto;

      

      (c)          
any and all Losses incurred by any of them arising out of, relating to or based
upon any of Seller’s assets that are not Purchased Assets or any of the Retained
Liabilities;

      

      (d)           any
and all Losses incurred by any of them arising out of, relating to or based upon
Seller’s ownership or use of the Purchased Assets prior to the Closing,
including any Liability for any Taxes;

      

      (e)           any
and all Losses incurred by any of them arising out of, relating to or based upon
the operation of Seller’s business prior to or after the Closing;
and

      

      (f)           any
and all Losses incurred by any of them arising out of, relating to or based upon
any claims made for workers’ compensation benefits or under any Employee Benefit
Plan due with respect to any event occurring or circumstance existing prior to
the Closing.

      

      The right
of Buyer and its Affiliates (and their respective directors, officers, agents
and employees, successors and assigns) to be indemnified hereunder for any
Loss shall not be limited or affected by any investigation conducted or notice
or knowledge obtained by or on behalf of any such Persons.

      

      9.3           Indemnification by
Buyer.  From and after
the date hereof, Buyer agrees to indemnify fully, hold harmless, protect and
defend Seller and Shareholders, and their respective directors, officers, agents
and employees, successors and assigns from and against:

      

      (a) any
and all Losses (as defined below) incurred by any of them arising out of,
relating to or based upon any inaccuracy in, or breach of, any of the
representations or warranties of Buyer contained in this Agreement, any
Transaction Document or in the Schedules or Exhibits hereto or
thereto;

      

      (b) any
and all Losses incurred by any of them arising out of, relating to or based upon
any failure to perform, or other breach of, any of the covenants or agreements
of Buyer contained in or incorporated into this Agreement, any Transaction
Document or in the Schedules or Exhibits hereto or thereto;

      

      (c) any
and all Losses incurred by any of them arising out of, relating to or based upon
Buyer’s ownership,  use or control of the Purchased Assets after the
Closing or failure to perform any of the obligations assumed by Buyer after the
Closing with respect to the Assumed Liabilities; and

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (d)            any
and all Losses incurred by any of them arising out of, relating to or based upon
Buyer and/or its Affiliates Liability for any Taxes related to the Purchased
Assets;; and

      

      (e)           any
and all Losses incurred by any of them arising out of, relating to or based upon
the operation of Buyer’s business after the Closing.

      

      The right
of the Seller and Shareholders (and their respective directors, officers, agents
and employees, successors and assigns) to be indemnified hereunder for any Loss
shall not be limited or affected by any investigation conducted or notice or
knowledge obtained by or on behalf of any such Persons.

      

      9.4           Losses.  For purposes
of this Agreement the term “Losses” shall mean any and all losses, costs,
claims, damages, Taxes, Liabilities, obligations, judgments, settlements,
awards, demands, offsets, reasonable out-of-pocket costs, expenses and
attorneys’ fees (including any such reasonable costs, expenses and attorneys’
fees incurred in enforcing a party’s right to indemnification against any
indemnifying party or with respect to any appeal) and penalties and interest, if
any.

      

      9.5           Procedure for
Indemnification for Third Party Claims.

      

      (a)           Promptly
after receipt by an indemnified party under Sections 9.2 and 9.3 of notice of
the commencement of any proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any Liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party’s failure to give such notice.

      

      (b)           If
any proceeding referred to in Section 9.5(a) is brought against an indemnified
party and it gives notice to the indemnifying party of the commencement of such
proceeding, the indemnifying party will be entitled to participate in such
proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such proceeding and provide indemnification with
respect to such proceeding), to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Article IX for any fees of other counsel or any other expenses with respect to
the defense of such proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such proceeding, other than
reasonable costs of investigation.  If the indemnifying party assumes
the defense of a proceeding (as opposed to participating in the defense as
provided above), (i) it will be conclusively established for purposes of this
Agreement that the claims made in that proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party’s consent,
which shall not be unreasonably withheld, unless (A) there is no finding or
admission of any violation of law or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified
party, and (B) the sole relief provided is monetary damages that are paid in
full by the indemnifying party; and (iii) the indemnified party will have no
Liability with respect to any compromise or settlement of such claims effected
without its consent.  If notice is given to an indemnifying party of
the commencement of any proceeding and the indemnifying party does not, within
10 days after the indemnified party’s notice is given, give notice to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will be bound by any determination made in such proceeding or
any compromise or settlement effected by the indemnified party.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)  Notwithstanding
the foregoing, if an indemnified party determines in good faith that there is a
reasonable probability that a proceeding may adversely affect it or its
Affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such proceeding, but the indemnifying party will not be
bound by any determination of a proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).

       

      (d) Both
parties hereby consent to the non-exclusive jurisdiction of any court in which a
proceeding is brought by a third party against any indemnified person for
purposes of any claim that an indemnified person may have under this Agreement
with respect to such proceeding or the matters alleged therein, and agree that
process may be served on either party with respect to such a claim anywhere in
the world.

      

      9.6           Set-Off Rights;
Character of Indemnity
Payments.  The indemnifying
party shall promptly pay the indemnified party any amount due under this Article
IX.  Buyer shall have the right, but not the obligation, to set-off
against the Additional Purchase Consideration any amount Seller or any
Shareholder may be obligated to pay Buyer under the terms of this
Agreement.  If, contrary to the intent of the parties, any payment
made pursuant to this Article IX is treated as taxable income to the recipient,
then the payor shall indemnify and hold harmless the recipient from any
Liability for Taxes attributable to the receipt of such payment.  For
purposes of this Section 9.6, the indemnified party will be considered to be
liable for Tax in respect of any payment treated as taxable income at the
highest marginal tax rate then in effect for corporations in the jurisdiction so
characterizing the payment for the year such payment is considered to be earned
by the indemnified party.

      

      9.7           Limitation on
Shareholders’ Liability. Each of the parties hereby agrees that the
maximum liability of Shareholders under this Agreement in respect of any
indemnity claim under this Article IX shall not exceed the aggregate purchase
price (including any Additional Purchase Consideration) under this
Agreement.

      

      

      

      ARTICLE
X.

      MISCELLANEOUS

      

      10.1         Notices.  All notices,
communications and deliveries hereunder shall be made in writing signed by the
party making the same, shall specify the Section hereunder pursuant to which it
is given or being made, and shall be delivered by registered or certified mail
(with postage and other fees prepaid) as follows:

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          	
                  To
      Buyer:

                	
                  INX
      Inc.

                
	 
      	
                  Attn:  James
      H. Long, Chairman & Chief Executive Officer

                
	 
      	
                  6401
      Southwest Freeway

                
	 
      	
                  Houston,
      Texas  77074

                
	 
      	
                  Telecopy:
      (713) 795-2307

                
	 
      	
                  Email:  jim.long@inxi.com

                
	 
      	 
      
	
                  With
      a copy to:

                	
                  Mayer
      Brown LLP

                
	 
      	
                  Attn:
      Robert F. Gray, Jr.

                
	 
      	
                  700
      Louisiana Street

                
	 
      	
                  Suite
      3600

                
	 
      	
                  Houston,
      Texas  77002

                
	 
      	
                  Telecopy:  (713)
      632-1867

                
	 
      	
                  Email:  rgray@mayerbrown.com

                
	 
      	 
      
	
                  To
      Seller or Shareholders:

                	 
      
	 
      	
                  Ethan
      Simmons

                
	 
      	
                  12
      Willard Street

                
	 
      	
                  Newton,  MA  02458

                
	 
      	 
      
	 
      	
                  Matthew
      Field

                
	 
      	
                  17
      Metacomet Street

                
	 
      	
                  Walpole,  MA  02081

                
	 
      	 
      
	 
      	
                  Michael
      DiCenzo

                
	 
      	
                  44
      Homeward Lane

                
	 
      	
                  Walpole,  MA  02081

                
	 
      	 
      
	
                  with
      a copy to:

                	 
      
	 
      	
                  Gleason
      & Gleason

                
	 
      	
                  Attn:  Jo
      Ann Jorge

                
	 
      	
                  245
      Winter Street

                
	 
      	
                  Ashland,  MA  01721

                
	 
      	
                  Telephone:  508
      881 2955

                
	 
      	
                  Email:  jjorge@gleasonlawfirm.net

                

        

      

      

      or to
such other representative or at such other address of a party as such party
hereto may furnish to the other parties in writing. Such notice shall be
effective upon the date of delivery or the intended recipient’s refusal to
accept delivery.  After any notice is made hereunder, the party taking
such action will use its best efforts to deliver a copy of such notice to the
e-mail address of the intended recipients as soon as practical but in no event
later than 12 hours after such action has been taken.

      

      10.2        
Attachments.  All schedules and
exhibits attached hereto are hereby incorporated into this Agreement and are
hereby made a part hereof as if set out in full in this Agreement.

      

      10.3         Assignment;
Successors in Interest.  No assignment or transfer by any party
of its respective rights and obligations hereunder shall be made except with the
prior written consent of the other parties hereto, except Buyer shall be
permitted to assign its rights and obligations hereunder to one of its
Affiliates, but no such assignment will release Buyer from its obligations
hereunder.  This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their successors and permitted assigns and
any reference hereto shall also be a reference to a permitted successor or
assign.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.4         Number;
Gender.  Whenever the
context so requires, the singular number shall include the plural and the plural
shall include the singular, and the gender of any pronoun shall include the
other genders.

      

      10.5         Captions.  The titles and
captions contained in this Agreement are inserted herein only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof. Unless
otherwise specified to the contrary, all references to Articles and Sections are
references to Articles and Sections of this Agreement and all references to
Exhibits are references to Exhibits to this Agreement.

      

      10.6         Controlling Law;
Venue; Integration: Amendment.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas without regard to choice of law provisions, statutes, regulations or
principles of this or any other jurisdiction.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts of the State of Texas for any action, suit or proceeding arising in
connection with this Agreement, and agrees that any such action suit or
proceeding shall be brought only in any such court in Houston, Texas (and waives
any objection based on forum non conveniens or any other jurisdiction to venue
therein).  This Agreement (and the related written agreements to be
entered into in connection with this Agreement) supersedes all negotiations,
agreements and understandings among the parties with respect to the subject
matter hereof and constitutes the entire agreement among the parties hereto.
This Agreement may not be amended, modified or supplemented except by the
written agreement of Seller and Buyer.  EACH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

      

      10.7        
Counterparts.  This Agreement
may be executed in counterparts, including the signature pages, each of which
shall be deemed an original and all of which together shall constitute one and
the same agreement.  In addition, the parties agree that the
counterparts of this Agreement so signed may be evidenced by delivery of a
telecopy or other electronic transmission of the signature page image to this
Agreement to the other party at the number listed in Section 10.1 and that such
telecopied signature pages shall be treated for all purposes as original
signatures to this Agreement.

      

      10.8         Enforcement of
Certain Rights.  Nothing expressed
or implied in this Agreement is intended, or shall be construed, to confer upon
or give any person, firm or corporation other than the parties hereto, their
successors or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, or result in such person, firm
or corporation being deemed a third party beneficiary of this
Agreement.

      

      10.9         Waiver.  Any agreement on
the part of a party hereto to any extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.  A
waiver by one party of the performance of any covenant, agreement, obligation,
condition, representation or warranty shall not be construed as a waiver of any
other covenant, agreement, obligation, condition, representation or warranty. A
waiver by any party of the performance of any act shall not constitute a waiver
of the performance of any other act or an identical act required to be performed
at a later time.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.10       Arbitration;
Legal Proceedings.

      

      (a)           The
parties shall attempt in good faith to resolve any dispute arising out of or
relating to this Agreement, the breach, termination or validity hereof or the
transactions contemplated herein promptly by negotiation between a
representative of Buyer and Seller.  Either Seller or Buyer may give
the other written notice that a dispute exists (a “Notice of Dispute”).
The Notice of Dispute shall include a statement of such party's position and the
name and title of the representative who will represent such party. Within ten
(10) days of the delivery of the Notice of Dispute, a representative from each
party hereto shall meet at a mutually acceptable time and place, and thereafter
as long as they reasonably deem necessary, to attempt to resolve the dispute.
All documents and other information or data on which each party relies
concerning the dispute shall be furnished or made available on reasonable terms
to the other party at or before the first meeting of the parties as provided by
this paragraph.

      

      (b)           Except
as provided in Section 10.10(d) below, any controversy or claim arising out of
or relating to this Agreement, the breach, termination or validity hereof, or
the transactions contemplated herein, if not settled by negotiation as provided
in paragraph (a) of this Section 10.10, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules (“CAR”) of the American
Arbitration Association (“AAA”), by one
arbitrator selected by mutual agreement of the parties.  In the event
the parties cannot agree to an arbitrator, the arbitrator shall be selected by
the CAR, Selection of Arbitrators.  Either party may initiate
arbitration by delivering a written election to arbitrate to the other party at
any time after twenty (20) days following the delivery of a Notice of Dispute if
the dispute has not then been settled by negotiation, or sooner if the other
party fails to participate in negotiation in accordance with paragraph (a)
above. The arbitration procedure shall be governed by the United States
Arbitration Act, 9 U.S.C. Section 1-16 (the “Act”) and shall be
held in Houston, Texas, and the award rendered by the arbitrator shall be final
and binding on the parties and may be entered in any court having jurisdiction
thereof, subject to the court’s authority to modify or review the award as
provided in the Act.

      

      (c)           Each
party shall bear its own costs and shall share equally the fees and expenses of
the arbitrator.

      

      (d)           Each
party hereby acknowledges and agrees that this Section 10.10 shall not apply to
any claim, controversy, action suit or proceeding in which a party hereto seeks
specific performance, injunctive relief or any other equitable relief and that
such party may initiate any such claim, controversy, action suit or proceeding
in accordance with Section 10.6 hereof.

      

      10.11       Reliance on
Counsel and Other Advisors.  Each party has
consulted such legal, financial, technical or other experts as it deems
necessary or desirable before entering into this Agreement. Each party
represents and warrants that it has read, knows, understands and agrees with the
terms and conditions of this Agreement.

      

      10.12       Injunctive
Relief.  The parties to
this Agreement hereby agree that any remedy at law for any breach of the
provisions contained in this Agreement shall be inadequate and that any party,
to the extent permitted by applicable law, shall be entitled to injunction
relief in addition to any other remedy such party might have under this
Agreement.

      

      10.13       Severability.  If a judicial or
arbitral determination is made that any of the provisions of this Agreement
constitutes an unreasonable or otherwise unenforceable restriction against
Seller or Shareholders the provisions of this Agreement shall be rendered void
only to the extent that such judicial or arbitral determination finds such
provisions to be unreasonable or otherwise unenforceable with respect to Seller
or Shareholders.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      10.14     
Attorney Fees.
In the event of a dispute arising under this Agreement, the prevailing
party in any subsequent arbitration or litigation proceeding brought to enforce
this Agreement shall be entitled to reimbursement of costs and reasonable attorney
fees.

      

      [Signature Page
Follows]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement as of
the day and year first written above.

      

      

      
        
          
            
              
                
                  
                    
                      
                        	
                                BUYER:

                              	 
      	
                                SELLER:

                              
	 
      	 
      	 
      
	
                                INX
      INC.

                              	 
      	
                                NETTEKS
      TECHNOLOGY CONSULTANTS, INC.

                              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                /s/ Brian Fontana

                              	 
      	
                                /s/ Ethan F. Simmons

                              
	
                                Brian
      Fontana,

                              	 
      	
                                Ethan
      F. Simmons

                              
	
                                Vice
      President & Chief Financial Officer

                              	 
      	
                                President

                              
	 
      	 
      	 
      
	
                                SHAREHOLDERS:

                              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                /s/ Ethan F. Simmons

                              	 
      	
                                /s/ Michael P. DiCenzo

                              
	
                                Ethan
      F. Simmons, individually

                              	 
      	
                                Michael
      P. DiCenzo,  individually

                              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                                /s/ Matthew J. Field

                              	 
      	 
      
	
                                Matthew
      J. Field, individuallyNEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    To
      Purchase 2,250,000
      Shares
      of
      Common Stock of

     

    CyberDefender
      Corporation

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, Newview
      Finance L.L.C. (the
      “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on November 10, 20011 (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from CyberDefender Corporation,
      a
      California corporation (the “Company”),
      2,250,000
      shares
      (the “Warrant
      Shares”)
      of
      Common Stock, no par value, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). This Warrant is executed and
      delivered pursuant to that certain Consulting Agreement, dated as of the Initial
      Exercise Date, between the Holder and the Company (the “Consulting
      Agreement”).

     

    
      	Section
              1.	
              [Intentionally
                Omitted] 

            

    

     

    
      	Section
              2.	
              Exercise.

            

    

     

    
      	 	
              a)

            	
              Vesting
                of Warrant Shares.
                Exercise of the purchase rights represented by this Warrant may be
                made as
                follows:

            

    

     

    
      	 	
              i)

            	
              900,000
                of the Warrant Shares shall vest and become exercisable on the Initial
                Exercise Date.

            

    

     

    
      	 	
              ii)

            	
              270,000
                of the Warrant Shares shall vest and become exercisable over the
                five
                month period commencing on December 1, 2008 and ending on April 1,
                2009;
                provided, however, in the event the Consulting Agreement is terminated
                prior to April 1, 2009, any unvested Warrant Shares at the time of
                such
                termination shall be forfeited and the Holder shall no longer have
                any
                purchase rights with respect
                thereto.

            

    

     

    
      
         

      

      
        1
          of
          14

        
          

        

      

      
         

      

    

     

    
      	 	
              b)

            	
              Exercise
                of Warrant.
                Subject to the foregoing vesting provisions, exercise of the purchase
                rights represented by this Warrant may be made at any time or times
                on or
                after the Initial Exercise Date and on or before the Termination
                Date by
                delivery to the Company of a duly executed facsimile copy of the
                Notice of
                Exercise Form annexed hereto (or such other office or agency of the
                Company as it may designate by notice in writing to the registered
                Holder
                at the address of such Holder appearing on the books of the Company);
                provided,
                however,
                within 5 Trading Days of the date said Notice of Exercise is delivered
                to
                the Company, the Holder shall have surrendered this Warrant to the
                Company
                and the Company shall have received payment of the aggregate Exercise
                Price of the shares thereby purchased by wire transfer or cashier’s check
                drawn on a United States bank. 

            

    

     

    
      	 	
              c)

            	
              Exercise
                Price.
                The exercise price of the Common Stock under this Warrant shall be
                $1.25,
                subject to adjustment hereunder (the “Exercise
                Price”).

            

    

     

    

    
      	 	
              d)

            	
              Exercise
                Limitations;
                Holder’s
                Restrictions.
                The Holder shall not have the right to exercise any portion of this
                Warrant to the extent that after giving effect to such issuance after
                exercise, the Holder (together with the Holder’s affiliates), as set forth
                on the applicable Notice of Exercise, would beneficially own in excess
                of
                4.99% of the number of shares of the Common Stock outstanding immediately
                after giving effect to such issuance.  For purposes of the foregoing
                sentence, the number of shares of Common Stock beneficially owned
                by the
                Holder and its affiliates shall include the number of shares of Common
                Stock issuable upon exercise of this Warrant with respect to which
                the
                determination of such sentence is being made, but shall exclude the
                number
                of shares of Common Stock which would be issuable upon (A) exercise
                of the
                remaining, nonexercised portion of this Warrant beneficially owned
                by the
                Holder or any of its affiliates and (B) exercise or conversion of
                the
                unexercised or nonconverted portion of any other securities of the
                Company
                (including, without limitation, any other Notes or Warrants) subject
                to a
                limitation on conversion or exercise analogous to the limitation
                contained
                herein beneficially owned by the Holder or any of its affiliates. 
                Except as set forth in the preceding sentence, for purposes of this
                Section 2(c), beneficial ownership shall be calculated in accordance
                with
                Section 13(d) of the Exchange Act, it being acknowledged by Holder
                that
                the Company is not representing to Holder that such calculation is
                in
                compliance with Section 13(d) of the Exchange Act and Holder is solely
                responsible for any schedules required to be filed in accordance
                therewith. To the extent that the limitation contained in this Section
                2(c) applies, the determination of whether this Warrant is exercisable
                (in
                relation to other securities owned by the Holder) and of which a
                portion
                of this Warrant is exercisable shall be in the sole discretion of
                such
                Holder, and the submission of a Notice of Exercise shall be deemed
                to be
                such Holder’s determination of whether this Warrant is exercisable (in
                relation to other securities owned by such Holder) and of which portion
                of
                this Warrant is exercisable, in each case subject to such aggregate
                percentage limitation, and the Company shall have no obligation to
                verify
                or confirm the accuracy of such determination. For purposes of this
                Section 2(c), in determining the number of outstanding shares of
                Common
                Stock, the Holder may rely on the number of outstanding shares of
                Common
                Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form
                10-KSB, as the case may be, (y) a more recent public announcement
                by the
                Company or (z) any other notice by the Company or the Company’s Transfer
                Agent setting forth the number of shares of Common Stock
                outstanding.  Upon the written or oral request of the Holder, the
                Company shall within two Trading Days confirm orally and in writing
                by
                email to the Holder the number of shares of Common Stock then
                outstanding.  In any case, the number of outstanding shares of Common
                Stock shall be determined after giving effect to the conversion or
                exercise of securities of the Company, including this Warrant, by
                the
                Holder or its affiliates since the date as of which such number of
                outstanding shares of Common Stock was reported. The provisions of
                this
                Section 2(c) may be waived by the Holder upon, at the election of
                the
                Holder, not less than 61 days’ prior notice to the Company, and the
                provisions of this Section 2(c) shall continue to apply until such
                61st
                day (or such later date, as determined by the Holder, as may be specified
                in such notice of waiver).

            

    

     

    
      
         

      

      
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              e)

            	
              Mechanics
                of Exercise.
                

            

    

    

    
      	
            	i)	
              Authorization
                of Warrant Shares.
                The Company covenants that all Warrant Shares which may be issued
                upon the
                exercise of the purchase rights represented by this Warrant will,
                upon
                exercise of the purchase rights represented by this Warrant, be duly
                authorized, validly issued, fully paid and nonassessable and free
                from all
                taxes, liens and charges in respect of the issue thereof (other than
                taxes
                in respect of any transfer occurring contemporaneously with such
                issue).
                The Company covenants that during the period the Warrant is outstanding,
                it will reserve from its authorized and unissued Common Stock a sufficient
                number of shares to provide for the issuance of the Warrant Shares
                upon
                the exercise of any purchase rights under this Warrant. The Company
                further covenants that its issuance of this Warrant shall constitute
                full
                authority to its officers who are charged with the duty of executing
                stock
                certificates to execute and issue the necessary certificates for
                the
                Warrant Shares upon the exercise of the purchase rights under this
                Warrant. The Company will take all such reasonable action as may
                be
                necessary to assure that such Warrant Shares may be issued as provided
                herein without violation of any applicable law or regulation, or
                of any
                requirements of the Trading Market upon which the Common Stock may
                be
                listed.

            

    

     

    
      	
            	ii)	
              Delivery
                of Certificates Upon Exercise.
                Certificates for shares purchased hereunder shall be transmitted
                by the
                transfer agent of the Company to the Holder by crediting the account
                of
                the Holder’s prime broker with the Depository Trust Company through its
                Deposit Withdrawal Agent Commission (“DWAC”)
                system if the Company is a participant in such system, and otherwise
                by
                physical delivery to the address specified by the Holder in the Notice
                of
                Exercise within 5 Trading Days from the delivery to the Company of
                the
                Notice of Exercise Form, surrender of this Warrant and payment of
                the
                aggregate Exercise Price as set forth above (“Warrant
                Share Delivery Date”).
                This Warrant shall be deemed to have been exercised on the date the
                Exercise Price is received by the Company. The Warrant Shares shall
                be
                deemed to have been issued, and Holder or any other person so designated
                to be named therein shall be deemed to have become a holder of record
                of
                such shares for all purposes, as of the date the Warrant has been
                exercised by payment to the Company of the Exercise Price and all
                taxes
                required to be paid by the Holder, if any, pursuant to Section 2(d)(vi)
                prior to the issuance of such shares, have been paid.
                

            

    

     

    
      
         

      

      
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            	iii)	
              Delivery
                of New Warrants Upon Exercise.
                If this Warrant shall have been exercised in part, the Company shall,
                at
                the time of delivery of the certificate or certificates representing
                Warrant Shares, deliver to Holder a new Warrant evidencing the rights
                of
                Holder to purchase the unpurchased Warrant Shares called for by this
                Warrant, which new Warrant shall in all other respects be identical
                with
                this Warrant.

            

    

     

    
      	
            	iv)	
              Rescission
                Rights.
                If the Company fails to cause its transfer agent to transmit to the
                Holder
                a certificate or certificates representing the Warrant Shares pursuant
                to
                this Section 2(d)(iv) by the Warrant Share Delivery Date, then the
                Holder
                will have the right to rescind such
                exercise.

            

    

     

    
      	
            	v)	
              No
                Fractional Shares or Scrip.
                No fractional shares or scrip representing fractional shares shall
                be
                issued upon the exercise of this Warrant. As to any fraction of a
                share
                which Holder would otherwise be entitled to purchase upon such exercise,
                the Company shall pay a cash adjustment in respect of such final
                fraction
                in an amount equal to such fraction multiplied by the Exercise
                Price.

            

    

     

    
      	
            	vi)	
              Charges,
                Taxes and Expenses.
                Issuance of certificates for Warrant Shares shall be made without
                charge
                to the Holder for any issue or transfer tax or other incidental expense
                in
                respect of the issuance of such certificate, all of which taxes and
                expenses shall be paid by the Company, and such certificates shall
                be
                issued in the name of the Holder or in such name or names as may
                be
                directed by the Holder; provided,
                however,
                that in the event certificates for Warrant Shares are to be issued
                in a
                name other than the name of the Holder, this Warrant when surrendered
                for
                exercise shall be accompanied by the Assignment Form attached hereto
                duly
                executed by the Holder; and the Company may require, as a condition
                thereto, the payment of a sum sufficient to reimburse it for any
                transfer
                tax incidental thereto.

            

    

     

    
      	
            	vii)	
              Closing
                of Books.
                The Company will not close its stockholder books or records in any
                manner
                which prevents the timely exercise of this Warrant, pursuant to the
                terms
                hereof.

            

    

     

    
      
         

      

      
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      	Section
              3.	
              Certain Adjustments.

            

    

     

    
      	
            	a)	
              Stock
                Dividends and Splits.
                If the Company, at any time while this Warrant is outstanding: (A)
                pays a
                stock dividend or otherwise make a distribution or distributions
                on shares
                of its Common Stock or any other equity or equity equivalent securities
                payable in shares of Common Stock (which, for avoidance of doubt,
                shall
                not include any shares of Common Stock issued by the Company pursuant
                to
                this Warrant), (B) subdivides outstanding shares of Common Stock
                into a
                larger number of shares, (C) combines (including by way of reverse
                stock
                split) outstanding shares of Common Stock into a smaller number of
                shares,
                or (D) issues by reclassification of shares of the Common Stock any
                shares
                of capital stock of the Company, then in each case the Exercise Price
                shall be multiplied by a fraction of which the numerator shall be
                the
                number of shares of Common Stock (excluding treasury shares, if any)
                outstanding before such event and of which the denominator shall
                be the
                number of shares of Common Stock outstanding after such event and
                the
                number of shares issuable upon exercise of this Warrant shall be
                proportionately adjusted. Any adjustment made pursuant to this Section
                3(a) shall become effective immediately after the record date for
                the
                determination of stockholders entitled to receive such dividend or
                distribution and shall become effective immediately after the effective
                date in the case of a subdivision, combination or
                re-classification.

            

    

     

    
      	 	
              b)

            	
              Calculations.
                All calculations under this Section 3 shall be made to the nearest
                cent or
                the nearest 1/100th of a share, as the case may be. The number of
                shares
                of Common Stock outstanding at any given time shall not includes
                shares of
                Common Stock owned or held by or for the account of the Company,
                and the
                description of any such shares of Common Stock shall be considered
                on
                issue or sale of Common Stock. For purposes of this Section 3, the
                number
                of shares of Common Stock deemed to be issued and outstanding as
                of a
                given date shall be the sum of the number of shares of Common Stock
                (excluding treasury shares, if any) issued and
                outstanding.

            

    

     

    
      	
            	c)	
              Notice
                to Holders.
                

            

    

     

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. 

     

    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights;; (D) the
      Company shall authorize the voluntary or involuntary dissolution, liquidation
      or
      winding up of the affairs of the Company; then, in each case, the Company shall
      cause to be mailed to the Holder at its last addresses as it shall appear upon
      the Warrant Register of the Company, at least 10 calendar days prior to the
      applicable record or effective date hereinafter specified, a notice stating
      the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be taken,
      the date as of which the holders of the Common Stock of record to be entitled
      to
      such dividend, distributions, redemption, rights or warrants are to be
      determined or; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      10-day period commencing the date of such notice to the effective date of the
      event triggering such notice.

     

    
      
         

      

      
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              d)

            	
              Fundamental
                Transaction.
                If, at any time while this Warrant is outstanding, (A) the Company
                effects
                any merger or consolidation of the Company with or into another Person,
                (B) the Company effects any sale of all or substantially all of its
                assets
                in one or a series of related transactions, (C) any tender offer
                or
                exchange offer (whether by the Company or another Person) is completed
                pursuant to which holders of Common Stock are permitted to tender
                or
                exchange their shares for other securities, cash or property, or
                (D) the
                Company effects any reclassification of the Common Stock or any compulsory
                share exchange pursuant to which the Common Stock is effectively
                converted
                into or exchanged for other securities, cash or property (in any
                such
                case, a “Fundamental
                Transaction”),
                then, upon any subsequent conversion of this Warrant, the Holder
                shall
                have the right to receive, for each Warrant Share that would have
                been
                issuable upon such exercise absent such Fundamental Transaction,
                at the
                option of the Holder, (a) upon exercise of this Warrant, the number
                of
                shares of Common Stock of the successor or acquiring corporation
                or of the
                Company, if it is the surviving corporation, and Alternate Consideration
                receivable upon or as a result of such reorganization, reclassification,
                merger, consolidation or disposition of assets by a Holder of the
                number
                of shares of Common Stock for which this Warrant is exercisable
                immediately prior to such event or (b) cash equal to the value of
                this
                Warrant as determined in accordance with the Black-Scholes option
                pricing
                formula (the “Alternate
                Consideration”).
                For purposes of any such exercise, the determination of the Exercise
                Price
                shall be appropriately adjusted to apply to such Alternate Consideration
                based on the amount of Alternate Consideration issuable in respect
                of one
                share of Common Stock in such Fundamental Transaction, and the Company
                shall apportion the Exercise Price among the Alternate Consideration
                in a
                reasonable manner reflecting the relative value of any different
                components of the Alternate Consideration. If holders of Common Stock
                are
                given any choice as to the securities, cash or property to be received
                in
                a Fundamental Transaction, then the Holder shall be given the same
                choice
                as to the Alternate Consideration it receives upon any exercise of
                this
                Warrant following such Fundamental Transaction. To the extent necessary
                to
                effectuate the foregoing provisions, any successor to the Company
                or
                surviving entity in such Fundamental Transaction shall issue to the
                Holder
                a new warrant consistent with the foregoing provisions and evidencing
                the
                Holder’s right to exercise such warrant into Alternate Consideration. The
                terms of any agreement pursuant to which a Fundamental Transaction
                is
                effected shall include terms requiring any such successor or surviving
                entity to comply with the provisions of this paragraph (f) and insuring
                that this Warrant (or any such replacement security) will be similarly
                adjusted upon any subsequent transaction analogous to a Fundamental
                Transaction.

            

    

     

    
      	 	
              e)

            	
              Exempt
                Issuance.
                Notwithstanding the foregoing, no adjustments, Alternate Consideration
                nor
                notices shall be made, paid or issued under this Section 3 in respect
                of
                an Exempt Issuance.

            

    

     

    
      	 	
              f)

            	
              Voluntary
                Adjustment By Company.
                The Company may at any time during the term of this Warrant reduce
                the
                then current Exercise Price to any amount and for any period of time
                deemed appropriate by the Board of Directors of the
                Company.

            

    

     

    
      
         

      

      
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    Section
      4. Transfer
      of Warrant.

     

    
      	 	
              a)

            	
              Transferability.
                Subject to compliance with any applicable securities laws and the
                conditions set forth in Sections 5 and 4(d) hereof, this Warrant
                and all
                rights hereunder are transferable, in whole or in part, upon surrender
                of
                this Warrant at the principal office of the Company, together with
                a
                written assignment of this Warrant substantially in the form attached
                hereto duly executed by the Holder or its agent or attorney and funds
                sufficient to pay any transfer taxes payable upon the making of such
                transfer. Upon such surrender and, if required, such payment, the
                Company
                shall execute and deliver a new Warrant or Warrants in the name of
                the
                assignee or assignees and in the denomination or denominations specified
                in such instrument of assignment, and shall issue to the assignor
                a new
                Warrant evidencing the portion of this Warrant not so assigned, and
                this
                Warrant shall promptly be cancelled. A Warrant, if properly assigned,
                may
                be exercised by a new holder for the purchase of Warrant Shares without
                having a new Warrant issued. 

            

    

     

    
      	 	
              b)

            	
              New
                Warrants.
                This Warrant may be divided or combined with other Warrants upon
                presentation hereof at the aforesaid office of the Company, together
                with
                a written notice specifying the names and denominations in which
                new
                Warrants are to be issued, signed by the Holder or its agent or attorney.
                Subject to compliance with Section 4(a), as to any transfer which
                may be
                involved in such division or combination, the Company shall execute
                and
                deliver a new Warrant or Warrants in exchange for the Warrant or
                Warrants
                to be divided or combined in accordance with such
                notice.

            

    

     

    
      	 	
              c)

            	
              Warrant
                Register.
                The Company shall register this Warrant, upon records to be maintained
                by
                the Company for that purpose (the “Warrant
                Register”),
                in the name of the record Holder hereof from time to time. The Company
                may
                deem and treat the registered Holder of this Warrant as the absolute
                owner
                hereof for the purpose of any exercise hereof or any distribution
                to the
                Holder, and for all other purposes, absent actual notice to the
                contrary.

            

    

     

    
      	 	
              d)

            	
              Transfer
                Restrictions.
                If,
                at the time
                of the surrender of this Warrant in connection with any transfer
                of this
                Warrant, the transfer of this Warrant shall not be registered pursuant
                to
                an effective registration
                statement under the Securities Act
                of 1933, as amended (the “Securities Act”) and under
                applicable state securities or blue sky laws, the Company may require,
                as
                a condition of allowing such transfer (i) that the Holder or transferee
                of
                this Warrant, as the case may be, furnish to the Company a written
                opinion
                of counsel (which opinion shall be in form, substance and scope customary
                for opinions of counsel in comparable transactions) to the effect
                that
                such transfer may be made without
                registration under
                the
                Securities Act and under applicable state securities or blue sky
                laws,
                (ii) that the holder or transferee execute and deliver to the Company
                an
                investment letter in form and substance acceptable to the Company
                and
                (iii) that the transferee be an “accredited
                investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
                promulgated under the Securities Act or a qualified institutional
                buyer as
                defined in Rule 144A(a) under the Securities
                Act.

            

    

     

    
      
         

      

      
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    Section
      5. Miscellaneous.

     

    
      	 	
              a)

            	
              Registration
                Requirement.
                Subject to the terms and limitations hereof, the Company shall file
                a
                registration statement on Form S-1 or other appropriate form under
                the
                Securities Act (the “Registration
                Statement”)
                registering for resale pursuant to Rule 415 of the Securities Act
                all
                Warrant Shares, and shall use its reasonable best efforts to maintain
                the
                Registration Statement effective, at its expense, for a period ending
                on
                the earlier of the second anniversary of the effective date thereof
                or the
                date when the Holder has resold all Warrant Shares. The Company shall
                file
                the Registration Statement no later than 75 days after the date hereof
                (the “Filing
                Date”),
                and shall use reasonable best efforts to cause the Registration Statement
                to become effective on or before the 120th
                day following the Filing Date (the “Effectiveness
                Date”).
                The Company’s failure to satisfy the obligations specified in the
                immediately preceding sentence shall require the Company to make
                a
                one-time payment to the Holder, as liquidated damages, of $.01 per
                Warrant
                Share. For the avoidance of doubt, any right to receive such payment
                shall
                be Holder’s sole and exclusive remedy for the failure of the Company to
                satisfy the obligations under this Section 5(a). At the Company’s election
                in its sole discretion, the Company may pay such liquidated damages,
                if
                any, in cash or Common Stock valued at the average closing price
                of the
                Common Stock for the five trading days immediately preceding the
                date on
                which the Company first becomes delinquent under this Section 5(a);
                provided,
                however,
                if at such time the Common Stock is not quoted on the OTC Bulletin
                Board
                or the NASDAQ stock market or listed on a national securities exchange,
                such liquidated damages must be paid in cash. Any liquidated damages
                resulting from the Company’s failure to cause the Registration Statement
                to become effective on or before the Effectiveness Date shall be
                forever
                waived in the event such failure is due to a limitation on registration
                imposed by the staff of the Securities and Exchange Commission pursuant
                to
                Rule 415 under the Securities Act. In such event, any Warrant Shares
                not
                included in the Registration Statement shall be included in a second
                registration statement filed no sooner than six months from the effective
                date of the Registration Statement, and the Company shall use reasonable
                best efforts to cause such second registration statement to become
                effective as soon as commercially practicable and shall maintain
                such
                second registration statement effective, at its expense, for a period
                commencing on the effective date thereof and ending on the earlier
                of the
                second anniversary of such effective date and the date when the Holder
                has
                resold all Warrant Shares.

            

    

     

    
      	 	
              b)

            	
              Title
                to Warrant.
                Prior to the Termination Date and subject to compliance with applicable
                laws and Section 4 of this Warrant, this Warrant and all rights hereunder
                are transferable, in whole or in part, at the office or agency of
                the
                Company by the Holder in person or by duly authorized attorney, upon
                surrender of this Warrant together with the Assignment Form annexed
                hereto
                properly endorsed. The transferee shall sign an investment letter
                in form
                and substance reasonably satisfactory to the
                Company.

            

    

     

    
      	 	
              c)

            	
              No
                Rights as Shareholder Until Exercise.
                This Warrant does not entitle the Holder to any voting rights or
                other
                rights as a shareholder of the Company prior to the exercise hereof.
                Upon
                the surrender of this Warrant and the payment of the aggregate Exercise
                Price (or by means of a cashless exercise), the Warrant Shares so
                purchased shall be and be deemed to be issued to such Holder as the
                record
                owner of such shares as of the close of business on the later of
                the date
                of such surrender or payment.

            

    

     

    
      
         

      

      
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              d)

            	
              Loss,
                Theft, Destruction or Mutilation of Warrant.
                The Company covenants that upon receipt by the Company of evidence
                reasonably satisfactory to it of the loss, theft, destruction or
                mutilation of this Warrant or any stock certificate relating to the
                Warrant Shares, and in case of loss, theft or destruction, of indemnity
                or
                security reasonably satisfactory to it (which, in the case of the
                Warrant,
                shall not include the posting of any bond), and upon surrender and
                cancellation of such Warrant or stock certificate, if mutilated,
                the
                Company will make and deliver a new Warrant or stock certificate
                of like
                tenor and dated as of such cancellation, in lieu of such Warrant
                or stock
                certificate.

            

    

     

    
      	 	
              e)

            	
              Saturdays,
                Sundays, Holidays, etc.
                If the last or appointed day for the taking of any action or the
                expiration of any right required or granted herein shall be a Saturday,
                Sunday or a legal holiday, then such action may be taken or such
                right may
                be exercised on the next succeeding day not a Saturday, Sunday or
                legal
                holiday.

            

    

     

    
      	 	
              f)

            	
              Authorized
                Shares.
                The Company covenants that during the period the Warrant is outstanding,
                it will reserve from its authorized and unissued Common Stock a sufficient
                number of shares to provide for the issuance of the Warrant Shares
                upon
                the exercise of any purchase rights under this Warrant. The Company
                further covenants that its issuance of this Warrant shall constitute
                full
                authority to its officers who are charged with the duty of executing
                stock
                certificates to execute and issue the necessary certificates for
                the
                Warrant Shares upon the exercise of the purchase rights under this
                Warrant. The Company will take all such reasonable action as may
                be
                necessary to assure that such Warrant Shares may be issued as provided
                herein without violation of any applicable law or regulation, or
                of any
                requirements of the Trading Market upon which the Common Stock may
                be
                listed. 

            

    

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    
      
         

      

      
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    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    
      	 	
              g)

            	
              Jurisdiction.
                All questions concerning the construction, validity, enforcement
                and
                interpretation of this Warrant shall be determined in accordance
                with the
                provisions of the Consulting
                Agreement.

            

    

     

    
      	 	
              h)

            	
              Restrictions.
                The Holder acknowledges that the Warrant Shares acquired upon the
                exercise
                of this Warrant, if not registered, will have restrictions upon resale
                imposed by state and federal securities
                laws.

            

    

     

    
      	 	
              i)

            	
              Nonwaiver
                and Expenses.
                No course of dealing or any delay or failure to exercise any right
                hereunder on the part of Holder shall operate as a waiver of such
                right or
                otherwise prejudice Holder’s rights, powers or remedies, notwithstanding
                the fact that all rights hereunder terminate on the Termination Date.
                If
                the Company willfully and knowingly fails to comply with any provision
                of
                this Warrant, which results in any material damages to the Holder,
                the
                Company shall pay to Holder such amounts as shall be sufficient to
                cover
                any costs and expenses including, but not limited to, reasonable
                attorneys’ fees, including those of appellate proceedings, incurred by
                Holder in collecting any amounts due pursuant hereto or in otherwise
                enforcing any of its rights, powers or remedies
                hereunder.

            

    

     

    
      	 	
              j)

            	
              Notices.
                Any notice, request or other document required or permitted to be
                given or
                delivered to the Holder by the Company shall be delivered in accordance
                with the notice provisions of the Consulting
                Agreement.

            

    

     

    
      	 	
              k)

            	
              Limitation
                of Liability.
                No provision hereof, in the absence of any affirmative action by
                Holder to
                exercise this Warrant or purchase Warrant Shares, and no enumeration
                herein of the rights or privileges of Holder, shall give rise to
                any
                liability of Holder for the purchase price of any Common Stock or
                as a
                stockholder of the Company, whether such liability is asserted by
                the
                Company or by creditors of the
                Company.

            

    

     

    
      	 	
              l)

            	
              Remedies.
                Holder, in addition to being entitled to exercise all rights granted
                by
                law, including recovery of damages, will be entitled to specific
                performance of its rights under this Warrant. The Company agrees
                that
                monetary damages would not be adequate compensation for any loss
                incurred
                by reason of a breach by it of the provisions of this Warrant and
                hereby
                agrees to waive the defense in any action for specific performance
                that a
                remedy at law would be adequate.

            

    

     

    
      	 	
              m)

            	
              Successors
                and Assigns.
                Subject to applicable securities laws, this Warrant and the rights
                and
                obligations evidenced hereby shall inure to the benefit of and be
                binding
                upon the successors of the Company and the successors and permitted
                assigns of Holder. The provisions of this Warrant are intended to
                be for
                the benefit of all Holders from time to time of this Warrant and
                shall be
                enforceable by any such Holder or holder of Warrant
                Shares.

            

    

     

    
      
         

      

      
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              n)

            	
              Amendment.
                This Warrant may be modified or amended or the provisions hereof
                waived
                with the written consent of the Company and the
                Holder.

            

    

     

    
      	 	
              o)

            	
              Severability.
                Wherever possible, each provision of this Warrant shall be interpreted
                in
                such manner as to be effective and valid under applicable law, but
                if any
                provision of this Warrant shall be prohibited by or invalid under
                applicable law, such provision shall be ineffective to the extent
                of such
                prohibition or invalidity, without invalidating the remainder of
                such
                provisions or the remaining provisions of this
                Warrant.

            

    

     

    
      	 	
              p)

            	
              Headings.
                The headings used in this Warrant are for the convenience of reference
                only and shall not, for any purpose, be deemed a part of this
                Warrant.

            

    

     

    

     

    

    ********************

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized.

     

    

    Dated:
      November 10, 2008

     

    
      	
              CYBERDEFENDER
                CORPORATION

               

            
	
              /s/
                Gary
                Guseinov                     
                

              Name:
                Gary Guseinov

              Title:
                Chief Executive Officer

            

    

    

    
      
         

      

      
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    NOTICE
      OF EXERCISE

    

    TO:
      CYBERDEFENDER CORPORATION

    

    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full in lawful money of the
      United States, together with all applicable transfer taxes, if any.

     

    (2) 
      Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    
      	
            	 	
              _______________________________

            

    

     

    
      	Tax
              ID Number	
              _______________________________
                

            

    

    

    The
      Warrant Shares shall be delivered to the following:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

     

    
      
         

      

      
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    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    
      	
            	Holder’s
              Signature:	
              _____________________________

            

    

    

    
      	
            	Holder’s
              Address:	
              _____________________________

            

    

    
      

      
        	
              	 	
                _____________________________

              

      

       

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.

    

    
      
         

      

      
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